Kuala lumpur: The revised projection for Malaysia’s GDP growth in 2025 by Bank Negara Malaysia (BNM) is a realistic forecast that aligns with the economy’s underlying growth potential, said economist Professor Geoffrey Williams. The central bank has adjusted Malaysia’s 2025 GDP growth projection to between 4.0 percent and 4.8 percent, down from its earlier projection of 4.5 percent to 5.5 percent. BNM’s projection considers various tariff scenarios, ranging from continued elevation of tariffs to more favorable trade negotiation outcomes.
According to BERNAMA News Agency, Williams attributed the revision of the growth forecast to uncertainties surrounding the United States government’s tariffs. From a local perspective, domestic demand remains strong and is expected to benefit from a lower Overnight Policy Rate (OPR) and the one-off RM100 cash handout for all citizens aged 18 and above, which is part of Prime Minister Anwar Ibrahim’s series of economic measures.
Although Malaysia’s total trade and exports have been strong, it is net trade that matters for growth, and this has been squeezed by front-loading and volatility due to the delayed tariff negotiations. Williams pointed out that the downgrade in growth expectations was anticipated and widely communicated. The central forecast now stands at approximately 4.5 percent, down from the previous forecast range of 4.5 to 5.5 percent.
Williams noted that the original forecast was optimistic even under normal circumstances, without the downside risk posed by the tariff negotiations. There are no significant concerns about growth potential, except for the direct effects of tariffs on Malaysia and major regional markets.
Addressing the impact of the revised GDP forecast on job creation, household spending, and investor confidence, Williams said he expects the unemployment rate to remain low, job creation to continue as usual, and investor confidence to stay relatively unaffected. He emphasized the importance of Malaysia securing a favorable tariff agreement to remain competitive against countries like Vietnam and Indonesia amid ongoing global uncertainties and evolving trade policies.
Williams also mentioned that the OPR cut should help keep growth within the revised forecast range, negating the need for further cuts. Meanwhile, the Department of Statistics Malaysia (DOSM) announced a further decline in Malaysia’s Producer Price Index (PPI) by 4.2 percent year-on-year in June 2025, following a 3.6 percent decline in the previous month.
The decline was reported across all sectors, with the mining and manufacturing sectors being the primary contributors to the index’s overall negative trend. Williams stated that the falling PPI is consistent with a low Consumer Price Index (CPI) and reflects price caution due to trade tensions, lower oil prices, and a strong ringgit.
Williams concluded that while the lower CPI reflects trade tensions and tight market conditions for businesses, it benefits consumers. Businesses are maintaining competitiveness by moderating producer prices, indicating no need for government intervention in the market.