BNM: Downside risks have risen due to recent developments

BNM: Downside risks have risen due to recent developments

Bank Negara Malaysia (BNM) has highlighted a rise in downside risks to the economy amid growing global trade uncertainties and geopolitical tensions, as outlined in its 2024 economic and monetary review. While maintaining its 2025 GDP growth forecast at 4.5% to 5.5%, the central bank emphasized that external challenges—including trade protectionism and shifting global supply chains— pose significant threats to Southeast Asia's economic stability. BNM Governor Abdul Rasheed Ghaffour noted that domestic demand and structural reforms remain critical to sustaining growth, particularly as exports are projected to expand 5.2% in 2025, slightly moderating from 5.7% in 2024.

The central bank reiterated its commitment to monitoring global developments and domestic policy spillovers while maintaining price stability. Headline inflation is expected to remain within 2% to 3.5% in 2025, supported by temporary adjustments to fuel subsidies and tax policies. BNM has kept its key interest rate unchanged at 3.00% since May 2023, with analysts anticipating no changes through 2025. The ringgit's performance will likely depend on interest rate differentials in major economies, according to the report.

BNM also stressed the importance of deepening trade partnerships and enhancing competitiveness to mitigate vulnerabilities from rising protectionism. Structural reforms, including investments in infrastructure and labor market adjustments, are seen as essential to achieving long-term high-income status.