# Malaysia: Economic Resilience Expected to Strengthen by 2025

- Link: https://www.thailand-business-news.com/asean/malaysia/181961-malaysia-sustained-economic-resilience-projected-for-2025
- Published: 2024-12-25T11:45:00+07:00
- Author: Akanksha Singh

Malaysia’s economy grew exceptionally well this year, at 5.6%, to the surprise of
us and most analysts. However, the economy’s performance is unlikely to be as strong
next year, with growth projected to slow to 4.3%. But that largely reflects shifting
base effects. Momentum looks set to remain resilient, preventing the central bank
from easing.

**Key Points**:

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 * Malaysia’s economy grew by 5.6% this year, but growth is expected to slow to 
   4.3% next year due to shifting base effects.
 * The export sector, particularly semiconductor exports, is expected to continue
   performing well.
 * Uncertainty about tariffs from the Trump administration poses a risk, but immediate
   threats are limited.
 * Bank Negara Malaysia is likely to maintain its current policy rate due to inflationary
   pressures and a strong US dollar environment.
 * Inflation is expected to rise in the second half of 2025 due to domestic fiscal
   measures.

The export sector, particularly semiconductor exports, is expected to maintain its
strong performance. Global demand for electronics is projected to remain robust 
into the next year, indicating that the peak of this trend is still some time away.
Even when the peak is reached, Malaysia’s position at the lower end of the chip 
supply chain suggests its peak will occur later, with a less severe downturn to 
follow. While uncertainty surrounding Trump’s tariffs adds some pressure to the 
outlook, immediate risks appear limited.

Malaysia exports relatively few products from the industries targeted by these tariffs.
The primary risk lies in electronics and electrical products, but until the U.S.
successfully reshapes its supply chains domestically, it will continue to depend
on reliable partners like Malaysia.Looking ahead, Bank Negara Malaysia is likely
to diverge from the global trend of monetary easing in 2025. The ringgit has faced
renewed pressure, which is expected to persist in the context of a strong U.S. dollar
environment. Inflationary pressures are anticipated to intensify in the second half
of the year due to domestic fiscal policies. Although Malaysia’s growth momentum
may moderate, it is still expected to remain at healthy levels.

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Source: Oxford Economics