FMM president Soh Thian Lai said the country’s gross domestic product (GDP) is expected to be between 4.5% and 5% this year, following growth rates of 5.9% in Q2 and 5.3% in Q3 of the previous year.

He said the GDP growth would be driven by strong demand, robust investment activities, and growth in exports and tourism.

“However, risks remain, including slower recovery in China, potential shifts in US policy, global commodity price fluctuations, and domestic inflation pressures,” he said in a statement today.

He added that the impact of potential US tariffs on Malaysia’s exports is expected to be limited, based on historical data.

Soh said exports continued to perform well this year, with key sectors like electrical and electronics, semiconductors, palm oil, machinery and chemicals driving expansion.

However, he said inflation is expected to rise to around 3% this year, driven by domestic factors such as the minimum wage increase, changes in EPF contributions for foreign workers, the extension of the sales and service tax, and subsidy rationalisation efforts.

“Nevertheless, inflation is expected to remain within the finance ministry’s target range of 2-3.5%.”

Soh also said the ringgit is expected to remain firm in 2025, buoyed by strong domestic demand and an improved tourism sector.

“Factors such as US Federal Reserve rate cuts, labour supply changes, and inflation will influence the currency’s strength.”