Kuala Lumpur: Strong domestic demand will continue to buffer Malaysia’s economy against external uncertainties, including possible repercussions from the imposition of US tariffs. ‘We are in a position of strength. We have a very strong domestic demand and this will continue to support growth,’ Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour told reporters after the release of BNM’s flagship reports here today.
According to BERNAMA News Agency, Abdul Rasheed highlighted that private consumption would be anchored by higher income prospects, improving labour market conditions, and healthy household balance sheets, which provide buffers to the economy. He noted that private investment, led by investment upcycles and high realisation rates of approved investments, would also contribute to boosting domestic economic growth.
Total investment is projected to expand by 9.3 per cent in 2025, underpinned by sustained external and domestic demand conditions, positive investor sentiment, firms’ continued access to financing, and ongoing project realisation, Abdul Rasheed stated. He emphasized that tourism is expected to play a significant role in 2025, with tourist arrivals and visits projected to surpass pre-pandemic levels, driven by improved flight connectivity, the extension of visa-free policies, and promotions leading up to Visit Malaysia Year 2026.
Abdul Rasheed acknowledged that the growth outlook is subject to considerable external uncertainties, including more restrictive trade policies, stronger retaliatory measures, and the escalation of geopolitical conflicts. He cautioned that these factors could result in weaker business sentiments and personal confidence, potentially affecting growth and inflation.
On monetary policy, Abdul Rasheed suggested that the central bank would likely maintain the overnight policy rate at 3.0 per cent throughout 2025. He reiterated BNM’s focus on maintaining an environment of price stability conducive to sustainable domestic economic growth. ‘Amid global policy uncertainties, we are following these developments very closely and remain vigilant against potential spillover effects on the Malaysian economy,’ said Abdul Rasheed.