Domestic Demand To Buffer Malaysia's Economy Against External Uncertainties -- BNM Governor

KUALA LUMPUR, March 24 (Bernama) -- Strong domestic demand will continue to buffer Malaysia's economy against external uncertainties, including possible repercussions from the imposition of US tariffs.

“We are in a position of strength. We have a very strong domestic demand and this will continue to support growth,” Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour told reporters after the release of BNM's flagship reports here today.

He said that private consumption would be anchored by higher income prospects, improving labour market conditions as well as healthy household balance sheets providing buffers to the economy. 

Private investment led by investment upcycles and high realisation rates of approved investments would also boost domestic economic growth, he said. 

Abdul Rasheed said total investment is projected to expand by 9.3 per cent in 2025, underpinned by sustained external and domestic demand conditions, positive investor sentiment, firms' continued access to financing, as well as the ongoing project realisation. 

The central bank governor said tourism is also expected to play a significant role in 2025 with tourist arrivals, and visits are projected to surpass the pre-pandemic levels this year, fuelled by the improved flight connectivity, the extension of visa-free policies and the promotions leading up to Visit Malaysia Year 2026. 

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Abdul Rasheed noted that growth outlook is subject to considerable external uncertainties, including more restrictive trade policies and stronger retaliatory measures as well as escalation of geopolitical conflicts. 

“Given all these elements, it could also result in weaker business sentiments, and weaker personal confidence, so they spend less. This could also affect growth, and also inflation,” he added.

On monetary policy, Abdul Rasheed hinted that the central would likely maintain the overnight policy rate at 3.0 per cent throughout 2025.

He said BNM would remain focused on maintaining an environment of price stability that is conducive to sustainable domestic economic growth.

“Amid global policy uncertainties, we are following these developments very closely and to remain vigilant against potential spillover effects on the Malaysian economy,” said Abdul Rasheed. 

-- BERNAMA