Kuala Lumpur: The International Monetary Fund has revised Malaysia’s real gross domestic product (GDP) growth forecast for 2025 to 4.1 percent, down from the previous estimate of 4.7 percent, indicating a broader adjustment across the region.
According to BERNAMA News Agency, the IMF’s April 2025 World Economic Outlook, titled “A Critical Juncture amid Policy Shifts”, also anticipates Malaysia’s economy to grow by 3.8 percent in 2026. The global growth forecast for 2025 was reduced to 2.8 percent, a decrease of 0.5 percentage points from the earlier estimate in January.
Malaysia’s regional counterparts are also seeing similar downgrades. The IMF adjusted Indonesia’s 2025 growth forecast to 4.7 percent from 5.1 percent. The Philippines is now projected to grow by 5.5 percent, down from 6.1 percent, while Thailand’s outlook was revised to 1.8 percent from 2.9 percent.
The IMF highlighted that significant policy shifts are altering the global trade environment, adding to uncertainty and challenging the resilience of the global economy. It noted the United States’ implementation of numerous tariffs against trading partners, which prompted countermeasures and influenced market reactions.
The fund emphasized that the global economy is at a critical point, with signs of stabilization appearing throughout 2024 after a period of significant shocks. Inflation is decreasing from multidecade highs, moving gradually towards central bank targets, while labor markets are normalizing with unemployment and vacancy rates returning to pre-pandemic levels.
In terms of productivity, the IMF observed a shift in manufacturing activity from advanced economies to emerging markets. While industrial production initially declined globally during the pandemic, recovery trajectories have varied. Production has significantly increased in China and smaller European Union economies, as well as in the ASEAN-5 countries, including Malaysia. However, Japan and larger EU countries have struggled to reach pre-pandemic production levels. Meanwhile, the United States has seen a stronger rebound in industrial production compared to other advanced economies.
Regarding commodities, the IMF forecasts a 7.9 percent decline in fuel prices in 2025, driven by a 15.5 percent drop in oil prices and a 15.8 percent decrease in coal prices. These reductions are expected to be offset by a 22.8 percent rise in natural gas prices due to colder-than-expected weather and the stoppage of Russian gas flows to Europe via Ukraine since January. Non-fuel commodity prices are expected to rise by 4.4 percent in 2025.