THE International Monetary Fund (IMF) has upgraded Malaysia’s economic growth forecast for 2025 to 4.5 per cent, up 0.4 percentage points from its previous estimate, reflecting cautious optimism despite continuing global trade tensions and tariff-related uncertainties.
Bernama cited today that in IMF’s July 2025 World Economic Outlook update, the IMF also revised Malaysia’s 2026 growth projection upward by 0.2 percentage points to 4.0 per cent, citing improved sentiment across emerging and developing economies.
Commenting on the update, Bank Muamalat Malaysia Bhd chief economist Dr Afzanizam Abdul Rashid said the revision highlights the “degree of uncertainty concerning US tariff policies”, but also suggests that Washington “appears open to further discussions, which could potentially lower tariff rates”.
Dr Afzanizam added that the front-loading of imports by US businesses in the first half of the year may have inadvertently supported global economic momentum, lending credibility to the IMF’s upgraded forecast.
UOB Kay Hian Wealth Advisors Sdn Bhd’s head of investment research, Mohd Sedek Jantan, noted that businesses are likely to delay capital investment decisions pending greater clarity on international trade policies.
“Despite persistent uncertainty surrounding US trade tariffs and escalating geopolitical tensions, we believe the impact of trade transmission shocks on GDP will materialise with a lagged effect, typically within a 12 to 15-month horizon,” he said.
He added that the IMF’s revised projection is in line with UOB’s own May 2025 forecast, and reflects “a broader behavioural shift among companies and policymakers” that is expected to emerge more visibly from 2026 onwards.
“These forward-looking adjustments are likely to shape the medium-term growth trajectory and capital allocation patterns across key sectors,” said Mohd Sedek.
Meanwhile, AmBank Group chief economist Firdaos Rosli projected a more modest growth rate of 3.8 per cent for 2025, slightly below Bank Negara Malaysia’s (BNM) projected range of 4.0 to 4.8 per cent, and the IMF’s 4.5 per cent estimate.
He nonetheless acknowledged the possibility of stronger performance should external conditions improve.
“Any easing of US trade and non-tariff barriers would benefit Malaysia’s export outlook,” Firdaos said. However, he cautioned that softening demand in key markets such as China and the European Union, particularly for non-semiconductor exports, could limit gains in the second half of the year.
Firdaos estimated Malaysia’s GDP growth for the first half of 2025 at 4.45 per cent, and said that “growth in 2H2025 should come in around 4.5 per cent if the IMF’s forecast is on point”.
On the domestic front, Firdaos highlighted a range of supportive factors including subdued inflation, stable labour market conditions, and recent fiscal measures.
“The 25-basis-point Overnight Policy Rate (OPR) cut, civil service wage hikes, minimum wage adjustments, and income-support initiatives are all expected to strengthen demand-side activity,” he said, with inflation likely to remain below two per cent.
The IMF’s global report, titled *Global Economy: Tenuous Resilience amid Persistent Uncertainty*, also projected growth across emerging and developing economies at 4.1 per cent in 2025 and 4.0 per cent in 2026. - July 31, 2025
