CGS INTERNATIONAL REVISES MALAYSIA 2025 GDP GROWTH TO 4.2 PCT

KUALA LUMPUR, April 21 (Bernama) -- CGS International Securities Malaysia Sdn Bhd has revised Malaysia’s 2025 gross domestic product (GDP) growth forecast to 4.2 per cent year-on-year (y-o-y) from 4.6 per cent previously, below the official 4.5-5.5 per cent estimate.

In a note today, it said the revision reflects the weaker-than-expected GDP performance in the first quarter of 2025 (1Q 2025) and the balance of risks, which include a strong frontloading effect to extend further following the 90-day United States (US) tariff pause.

“Shipments to the US soared 50 per cent y-o-y in March, and we expect this to continue in the next few months,” it said.

On Friday, the Department of Statistics Malaysia (DOSM) expected  Malaysia’s economy to grow by 4.4 per cent in the first quarter of 2025 (1Q 2025) based on advance estimates, easing from a five per cent expansion in the previous quarter, backed by domestic activities and steady demand.

The finalised 1Q 2025 GDP data is scheduled for release on May 16, 2025. 

CGS International opined that there is considerable strength in the domestic economy in 2025, following the government’s efforts in labour reforms, such as wage hikes in tandem with low inflation, which could lead to greater support for consumption.

Meanwhile, Kenanga Investment Bank Bhd has maintained its 2025 GDP growth forecast at 4.8 per cent.

“The actual 1Q 2025 GDP may beat the Department of Statistics Malaysia’s advance estimate.

“We also expect frontloading activity in 2Q 2025, spurred by the 90-day reciprocal tariff pause, which could boost near-term growth and partly cushion a potential second half of 2025 (2H 2025) slowdown. If trade tensions are prolonged and escalate further, we project overall growth could be cut by 0.3 - 0.5 percentage points,” it said.

Hong Leong Investment Bank Bhd (HLIB) said GDP growth is expected to be softer at 4.0 per cent y-o-y, below Bank Negara Malaysia’s (BNM) official target range of 4.5-5.5 per cent.

“Softer external demand is expected to weigh on the Malaysian economy amid heightened global trade uncertainty, particularly in light of the effective 5.5 per cent tariff, albeit lower than the standard base rate of 10 per cent, as well as the potential introduction of new tariffs targeting pharmaceutical and electrical and electronics (E&E) products,” it said.

Domestically, HLIB said Malaysia’s growth prospects are expected to be supported by household spending, underpinned by a healthy labour market and government policy measures such as RM13 billion cash transfers, the implementation of minimum wage in February this year, and a civil servant pay hike in December 2024.

“Improved tourism activity and sustained investment intentions will also contribute to overall growth. Nevertheless, downside risks remain, stemming from subdued external demand due to rising trade tensions.

“Considering this, we maintain our expectation for BNM to keep the overnight policy rate at 3.00 per cent for the upcoming Monetary Policy Committee (MPC) meeting on May 8, 2025, with a possibility of implementing a 25 basis points rate cut to 2.75 per cent from 2H 2025,” it said.

-- BERNAMA