Malaysia Weighs Lowering GDP Growth Forecast Amid U.S. Tariff Threats

Malaysia is expected to lower its 2025 GDP growth forecast of 4.5%–5.5% due to increasing trade and tariff uncertainties, particularly the looming threat of a 24% U.S. tariff on Malaysian exports starting in July unless an agreement is reached. Despite the potential setback, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour has indicated that the government is taking a cautious, wait-and-see approach, preferring to monitor global trade developments before making any immediate revisions. Malaysia's trade and finance ministers are currently engaged in negotiations in the United States to address these issues. The country’s central bank maintains a growth-friendly interest rate of 3%, with inflation considered manageable and domestic demand, investment, and exports showing resilience. The IMF recently trimmed Malaysia's 2024 GDP growth forecast to 4.1%, aligning with broader downward revisions across the region. Officials stress that monetary policy should prioritize stability and avoid amplifying economic volatility as Malaysia navigates these external challenges.