MALAYSIA’S economy is projected to grow at a slower pace of 4.4 per cent in the first quarter of 2025 (1Q2025), down from 5.0 per cent in the previous quarter, largely due to declining output in the mining and manufacturing sectors, according to Malaysian Rating Corporation Bhd (MARC).
In its latest assessment, the agency said that while external trade challenges persist, the domestic economy continues to find support from robust domestic demand, as well as steady performance in the services and construction sectors.
“Despite trade headwinds, exports rose by 6.8 per cent in March, led by electrical and electronics, palm oil, and machinery, particularly to the United States, Hong Kong, and Singapore,” MARC said in a statement today.
However, the agency warned that new US tariff measures could pose risks to Malaysia’s external sector. “Exposure to new US tariffs would pose risks, although the affected countries are likely to cope through ongoing supply chain diversification,” it noted.
On the inflation front, MARC reported that consumer price pressures remained contained at 1.4 per cent in March. Nonetheless, it cautioned that upward risks could emerge due to the recent hike in the minimum wage and the forthcoming rationalisation of RON95 fuel subsidies.
MARC also highlighted currency market dynamics, noting that the ringgit rebounded in April after initial weakness caused by former US President Donald Trump’s tariff announcement.
“A shift in investor sentiment, supported by regional currency appreciation and reduced demand for the US dollar, also drove renewed capital inflows,” it said.
Despite foreign investors pulling RM4.7 billion from the equity market, MARC observed that capital markets overall saw net inflows of RM2.8 billion, bolstered by stronger buying interest in the bond market. - May 2, 2025
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