Bank Negara Malaysia Lowers 2025 GDP Forecast to 4.0%-4.8% Over U.S. Tariff Policies and Global Trade Tensions

Bank Negara Malaysia has revised its 2025 GDP growth forecast downward to 4.0%-4.8% from 4.5%-5.5%, citing heightened global trade tensions and economic uncertainties. Governor Datuk Seri Abdul Rasheed Ghaffour emphasized the central bank’s cautious stance in response to shifting international dynamics, particularly the U.S. tariff policies under Trump’s administration. The adjustment reflects Malaysia’s exposure to global supply chain disruptions and trade volatility, which threaten export-dependent sectors like electronics and manufacturing [1]. While the ringgit has shown resilience in July 2025, closing higher against the U.S. dollar amid trade tensions, the central bank’s revised forecast underscores the risks to a more stable growth trajectory [2].

The revised projection highlights the interplay between domestic economic strategies and external shocks. BNM’s focus on structural reforms aims to bolster long-term competitiveness, balancing moderate inflation with sustainable policies. However, the narrowing of the growth corridor—particularly the lower bound—signals a shift toward risk mitigation rather than aggressive expansion. This aligns with broader regional trends as neighboring economies recalibrate to global challenges [1].

Analysts note that Malaysia’s efforts to negotiate lower U.S. tariffs could indirectly support the revised growth targets. The government’s engagement with U.S. counterparts to reduce trade barriers reflects the importance of international cooperation in stabilizing bilateral commerce [3]. Meanwhile, the central bank’s emphasis on structural reforms, such as enhancing domestic competitiveness, aims to counteract the spillover effects of trade disputes.

The adjustment also underscores the vulnerability of Malaysia’s export-driven economy. Historical parallels, such as U.S.-China trade tensions in 2018-2019, demonstrate how supply chain disruptions can reverberate through manufacturing and commodity sectors. BNM’s decision to lower the forecast acknowledges the need for adaptive policy frameworks in an unpredictable global landscape [1].

Governor Ghaffour stated, “The sustained strength in economic activity and moderate inflation provides a supportive environment to pursue structural reforms for a more resilient and competitive Malaysia in the future.” This sentiment reflects the central bank’s dual mandate: maintaining inflation control while fostering economic resilience. However, the revised forecast suggests that even resilient economies face challenges when navigating external volatility [1].

The central bank did not specify direct impacts on cryptocurrency markets, though Southeast Asian fintech and digital assets sectors may face indirect effects through supply chain adjustments. The absence of explicit policy changes for cryptocurrencies indicates a cautious approach to emerging financial technologies amid broader economic uncertainties [1].

Sources:

[1] [Malaysia Central Bank Cuts 2025 Growth, Inflation Forecasts Amid Global Risks]

https://www.morningstar.com/news/dow-jones/20250728125/malaysia-central-bank-cuts-2025-growth-inflation-forecasts-amid-global-risks

[2] [News Headlines | I3investor]

https://klse.i3investor.com/web/headline/news

[3] [The First 10 Nations to Send Humans into Space...]

https://www.instagram.com/p/DMkluSGx2cY/