Kuala Lumpur: CGS International Securities Malaysia Sdn Bhd has adjusted its projection for Malaysia’s 2025 gross domestic product (GDP) growth, revising it downwards to 4.2 percent year-on-year from the previous estimate of 4.6 percent. This adjustment sets the forecast below the official government estimate, which ranges between 4.5 and 5.5 percent.
According to BERNAMA News Agency, the revision takes into account the country’s weaker-than-expected GDP performance in the first quarter of 2025 and considers ongoing risks, including the impact of a 90-day United States tariff pause. The report notes that shipments to the US surged by 50 percent year-on-year in March, with expectations of continued growth in the coming months.
The Department of Statistics Malaysia (DOSM) recently projected a 4.4 percent GDP growth for the first quarter of 2025, a slight decrease from the five percent expansion observed in the previous quarter. This forecast is supported by domestic activities and steady demand. The finalized GDP data for the first quarter is set to be released on May 16, 2025.
CGS International highlights the resilience of Malaysia’s domestic economy, attributing it to government-led labor reforms and wage hikes aligned with low inflation, potentially enhancing consumer spending.
In contrast, Kenanga Investment Bank Bhd maintains its GDP growth forecast at 4.8 percent for 2025. The bank anticipates that the actual first-quarter GDP may surpass DOSM’s advance estimate and expects increased frontloading activity in the second quarter, driven by the tariff pause. However, any prolonged trade tensions could reduce overall growth by 0.3 to 0.5 percentage points.
Hong Leong Investment Bank Bhd (HLIB) offers a more conservative outlook, forecasting GDP growth at 4.0 percent year-on-year, below Bank Negara Malaysia’s official target range. HLIB cites softer external demand and global trade uncertainties as potential challenges, despite lower tariffs and the possibility of new tariffs affecting pharmaceutical and electronics sectors.
Domestically, HLIB anticipates growth to be bolstered by household spending, a robust labor market, government cash transfers, and policy measures such as minimum wage implementation and civil servant pay hikes. Additionally, tourism and investment activities are expected to contribute to economic growth, although risks related to external demand persist.
HLIB expects Bank Negara Malaysia to maintain the overnight policy rate at 3.00 percent during the upcoming Monetary Policy Committee meeting on May 8, 2025, with a potential rate cut to 2.75 percent in the latter half of the year.