KUALA LUMPUR: Bank Negara Malaysia (BNM) will continue to advance economic reforms in 2025, such as improving the country’s fiscal position, strengthening prospects for quality investment and improving wages.
BNM deputy governor Datuk Marzunisham Omar said that alongside existing BNM reforms, Malaysia should also prioritise a wider range of essential reform areas.
“Among these are implementing reforms to address the rising cost of living, strengthening social protection, improving the education and healthcare systems, as well as furthering efforts to attract high-quality investment,” he told delegates at the 2025 BNM Governor’s Address on the Malaysian Economy and Panel Discussion today.
Marzunisham said it is important to acknowledge that the current global economy is highly uncertain.
“We have a high level of uncertainty, and this high level of uncertainty could likely be prolonged. And given the rapidly evolving policy space and policy measures that are coming out, particularly from the US.
“And with this high level of uncertainty, it is very difficult to forecast in this environment.
“Nevertheless, as policymakers, we still have to undertake this. And in doing this, what we have done is in this baseline forecast, we have incorporated some assumptions on the tariff in the US, as well as some potential retaliatory measures that have been announced,” he said.
Marzunisham said BNM expects total investment to expand by 9.3% this year after growing by 12% last year. Private investment is projected to grow by 10.1% in 2025.
Further, he reiterated that the domestic economy is projected to grow between 4.5% and 5.5% in 2025.
Domestic demand, particularly private sector expenditure, household consumption and private investment, will continue to be the main driver of growth.
“We do, however, recognise the considerable external uncertainties out there.
“Inflation is expected to average between 2% and 3.5%. A key factor is how the government’s implementation of the reform measures will translate into broader pressure.
“In terms of the banking system, our banks remain strong, with strong capital and strong liquidity positions. This enables them to continue to support businesses and households through financing to support our economic activity,” Marzunisham said.
He said BNM has examined the timing, scope and duration of US-imposed tariffs, emphasising the fluidity of the current trade environment, where tariffs and trade restrictions may fluctuate.
He also highlighted the impact of ongoing global conflicts as a key influencing factor.
“We have factored this into our forecast, the downside, and the potential upside. In addition to making some of these assumptions into our baseline forecast, we also have several internal scenarios. This is to be prepared if the policies in the US turn out to be out of the expectation,“ Marzunisham said.
He added that BNM has forecast the global economy to grow between 2.8% and 3.3% in 2025, supported by positive labour market conditions, moderating inflation and less restrictive monetary policy, especially among the major economies.
“With this global growth, we expect global trade to grow between 2.7% and 3.2%. Of course, this outlook depends a lot on the uncertainties surrounding the tariff and other policies coming from the US and other major economies.
“We have seen heightened volatility in the past few months in the international financial markets, which also have a spillover effect into our domestic financial markets.”
Marzunisham said global developments influence Malaysia’s economy through three key channels.
First is trade, where any global growth and trade shifts impact Malaysia’s exports due to its highly open economy.
Second, financial markets, where volatility and tighter global financial conditions affect Malaysia’s financial and foreign exchange markets.
Third, sentiment, where uncertainties in the global economy can weaken business, investor, and consumer confidence.
Given these factors, Malaysia’s export growth is expected to moderate in 2025, he said.
Marzunisham says it is important to acknowledge that the current global economy is highly uncertain.
