KUALA LUMPUR: Bank Negara Malaysia (BNM) expects to revise its 2025 gross domestic product (GDP) growth forecast within the next one to two months and is refraining from immediate adjustments to avoid making changes based solely on assumptions.
“We want to wait for more incoming data and see the outcome of the ongoing negotiations (on US Liberation Day tariffs announced in early April). We already published our forecast in late March using rather conservative assumptions, but post-Liberation Day announcements have gone beyond expectations,“ governor Datuk Seri Shaik Abdul Rasheed Abdul Ghaffour said at a media briefing today.
BNM released its 2025 GDP growth forecast for Malaysia in late March, projecting an expansion between 4.5% and 5.5% for the year.
The governor stated that BNM now expects growth to be slightly lower than previously projected. “We acknowledge that we need to do the revision. But we want to have some solid grounds for some of the assumptions.”
He added that revising the outlook prematurely may not be healthy or positive for businesses.
“This is important because if we have just come up with a revision and need to revise it again the next day, it will add further uncertainty to an already heightened environment.”
The Malaysian economy expanded by 4.4% in the first quarter of 2025 (Q4’24: 4.9%), driven by the steady expansion in domestic demand, Abdul Rasheed announced at the briefing.
Household spending was sustained amid positive labour market conditions and income-related policy measures, including the upward revision of minimum wage and civil servant salary.
The expansion in investment activities was supported by realisation of new and existing projects.
In the external sector, export growth was slower due mainly to lower mining exports. This was partially offset by stronger electrical and electronics (E&E) exports and tourism activity.
At the same time, import growth, although more moderate, continued to be driven by strong demand for capital goods, reflecting continued investment and trade activities.
On the supply side, growth was driven by the services and manufacturing sectors.
The services sector was supported by higher government services while strong E&E production underpinned the performance in the manufacturing sector.
However, normalisation in motor vehicle sales and production following strong performances over the last three years affected the growth of the services and manufacturing sectors, respectively.
Overall growth was weighed down by a contraction in the mining sector amid lower oil and gas production.
On a quarter-on-quarter, seasonally adjusted basis, growth expanded by 0.7% (Q4’24: -0.2%).
In the first quarter of 2025, the central bank said, the ringgit remained broadly stable.
The nominal effective exchange rate against the currencies of Malaysia’s major trade partners increased marginally by 0.01%.
The ringgit appreciated by 0.8% against the US dollar, primarily driven by the weakening of the greenback as growing uncertainties over Washington’s trade policy resulted in increased expectations of more subdued US economic growth.
External factors are expected to continue influencing the ringgit’s exchange rate.
Notwithstanding that, Malaysia’s positive macroeconomic prospects supported by the ongoing implementation of structural reforms will provide medium-term support for the ringgit.
BNM remains committed to ensuring the orderly functioning of the domestic foreign exchange market, Abdul Rasheed said.
