Kuala lumpur: The International Monetary Fund (IMF) has revised its forecast for Malaysia’s real gross domestic product (GDP) growth, projecting an increase to 4.5 percent in 2025 and 4.0 percent in 2026.
According to BERNAMA News Agency, the IMF’s July 2025 World Economic Outlook (WEO) update, titled ‘Global Economy: Tenuous Resilience amid Persistent Uncertainty’, outlines that the revised forecast for 2025 is 0.4 percentage points higher than the April 2025 WEO reference forecast, with a 0.2 percentage point increase for 2026.
The IMF report also highlights expectations for growth in emerging market and developing economies, predicting 4.1 percent in 2025 and 4.0 percent in 2026. China’s growth forecast for 2025 has been revised upward by 0.8 percentage points to 4.8 percent, attributed to stronger-than-expected activity and reduced US-China tariffs. For 2026, China’s growth is expected to be 4.2 percent, reflecting lower effective tariff rates.
In India, growth projections have been adjusted to 6.4 percent for both 2025 and 2026, with the upward revision reflecting a more favorable external environment than previously assumed.
The IMF emphasizes the importance of reducing policy-induced uncertainty through promoting clear and transparent trade frameworks. The organization advocates for pragmatic cooperation to modernize trade rules and pursue multilateral initiatives on global issues. Bilateral negotiations are encouraged to defuse trade tensions, with aims to reduce trade and investment barriers without impacting third parties.
The IMF also underscores the significance of addressing root causes of trade tensions, specifically excess external imbalances stemming from internal policy choices. Central banks are advised to tailor monetary policies to maintain price and financial stability amid ongoing trade tensions and tariff changes. The IMF suggests that central banks in countries imposing tariffs need to balance shielding the real sector from price spikes against the risk of persistent inflation. Conversely, in countries not imposing tariffs, a gradual reduction in policy rates could be considered.
The report concludes that any further easing of monetary policy should be contingent upon clear evidence of inflation and inflation expectations aligning back to target levels.