Affin Bank Bhd had lowered its gross domestic product (GDP) projection on Malaysia to between 4% and 4.5% in 2025 after taking into account the negative implications, especially on the investment front, from the imposition of tariff by the US government.
The banks’ initial forecast of the country's GDP growth for this year was 5.2%.
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The banks’ initial forecast of the country's GDP growth for this year was 5.2%.
WATCH MORE: https://thestartv.com/c/news
SUBSCRIBE: https://cutt.ly/TheStar
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NewsTranscript
00:00How do you expect the Malaysian economy to vote for the remaining of the year,
00:03especially considering the current market conditions?
00:06When we look at the Malaysian economy, 2024 was a very good year,
00:11where Malaysia's GDP grew 5.1%.
00:13In fact, we expect the momentum to continue going into 2025,
00:18especially the early part, and with domestic demand continue to hold up
00:23due to steady private consumption as well as investment growth.
00:28But however, as we all know, after the implementation of the tariff,
00:35the expectation going especially into the second half of the year
00:39would be for some economic slowdown.
00:43The view that we are taking here is that looking at the GDP components,
00:48we expect private consumption to continue to hold up in the first half going into the second half
00:55because, as we all know, in the Budget 2025 announcement,
01:01Prime Minister has unveiled a series of stimulus that will continue to support domestic demand
01:07and also in terms of private consumption.
01:11But however, I think the downside risk here, looking at the GDP component again,
01:16is on private investment.
01:18Here, the expectation, the uncertainty of the possibility of a global recession
01:25will lead to manufacturers, investors holding back on their investment plan.
01:32And that, I think, will slow down on the investment growth in Malaysia.
01:37But having said that, again, when we look at the economy as a whole,
01:44domestic demand will continue to stay healthy.
01:49And therefore, our expectation would be for Malaysia economy to hold up in the region of 4% to 4.5%.
01:58In line of that, we are downgrading our GDP growth forecast from the current 5.2%.
02:07Partly to take into consideration the negative implications from the tariff,
02:15especially on the investment front.
02:18But nevertheless, again, when we look at exports and imports,
02:22Malaysia, we do have a very diversified export market.
02:25We are not just exporting to the US.
02:29And therefore, while most countries in the world will be affected by tariff,
02:34but we do not expect a collapse in export growth going into the second half of the year
02:40because there are exports that will continue to benefit from other export markets.
02:47And on the investment front, even though I guided earlier that there could be some postponement delay,
02:53but we are also continuing to see investment continue to be carried out.
02:59And that's where, you know, Chi Wei, when you talk about some of the investments
03:03that will continue to, you know, benefit Malaysia in the second half of the year.
03:09We do expect the data center investments to continue to come in
03:14because a lot of these big tech companies like Amazon, Google, Microsoft, as well as Oracle
03:22has committed to expand their data centers as well as AI kind of businesses in Malaysia.
03:30And this, maybe they may delay the decisions, but I think they are still trying to build the market
03:37and using Malaysia as a hub for a lot of these cloud services, and that will continue.
03:44There are also a lot of these committed investments, like multinationals, including some Chinese companies,
03:52that likely will continue because Malaysia provides the integrated ecosystem and supply chain
03:59for especially, like, semiconductors, as well as a lot of these components for, like, solar energy generation, for example.
04:08From a macro perspective, I think it's important for the Malaysian government
04:14to study the possible impact from the tariff.
04:20I think the ultimate goal is to stabilize market sentiment, as well as, you know, continue to provide some support
04:30in terms of monetary policy as well as fiscal policy.
04:35But from our perspective is, in view of the macroeconomic slowdown,
04:41many countries in the world are already engaging in some sort of fiscal support,
04:49at the same time, monetary policy easing.
04:53In the context of Malaysia, while current scenario doesn't really warrant for a monetary policy easing
05:02where Bank Negara cut interest rate,
05:05and similarly for the federal government to introduce fiscal stimulus measures,
05:09but if the economy continues to slow, going into the second half of the year,
05:16my view here is that the first step should be on the monetary policy easing
05:21because this is a pre-emptive measure by the Central Bank to ensure positive sentiment continues.
05:30And if need be, fiscal stimulus will have to come, but it will be at the later stage.
05:39So from that perspective, what we are saying here is that,
05:43in view of what's going on due to tariff,
05:47government around the world, including Malaysia,
05:49may have to take both fiscal stimulus as well as monetary policy support.
06:00Now, where do we get the funding for a national policy easing?
06:05What do we get the funding for?
06:06What we get the funding for?
06:07What we get the funding for?
06:07We get the funding for that as the federal government to ensure that we are aynı.
06:10So down to the beginning for the 2017 debate,
06:11we will be able to anticipate the financial assistance of the federal government
06:14and cover some of our federal government funding.
06:15And we will be able to ensure that we areucks consensus