Qualampur: Malaysia’s economic development approach has tilted downwards as a negative shock in the form of an external shocks of American mutual tariffs and delicate domestic spirit.
The Ambank Group’s chief economist Firdaos Rosli presented the bank’s second-half macroeconomic approach to Malaysia, saying that Ambank has maintained the forecast for the development of its 2025 GDP (GDP) at 3.8%, but caution is increasing.
He said, “Our exports are still highly concentrated in electronics and machinery, and new mutual tariffs have added a layer of cost. At the same time, personal consumption, while flexible on paper, is forced by low capacity to spend,” he told reporters in a media briefing today.
Earlier this month, Washington’s exports to the United States have fallen rapidly since Washington implemented 19% mutual tariffs.
Ambank estimates that 53.9% exports of Malaysia in the US are now affected, only with a semiconductor, which accounts for about 46% of shipments, discounts for time.
“Electronics and machinery accounts for about 72% of Malaysia’s exports in the US. This concentration exposes us for both global semiconductor cycle and tariff risk. If the US expands duties for a semiconductor, the effect will be serious,” Feros said.
He said that while Malaysia rubber gloves are more competitive than China, where tariffs remain more on Chinese products, widespread growth in trade costs cannot be ignored.
He said, “In fact, exporters have jumped from around 3.4% in 2023 this year in 2023. It is an important pair layer of cost.”
Despite the tight labor market of Malaysia, 3%, as unemployment and wages increased, have not been strongly raised as expected of domestic expenses.
Firdos described it as a contradiction: “The trend to spend correctly should be stable or higher, but debt applications and disbursements have diluted in recent months. It indicates low capacity to spend.”
Ambank has a 5% increase in private consumption for 2025, but Firdaos said that if trust improves, this figure could be higher.
Government measures, such as RM100 cash assistance, may provide a temporary boost, but they depicted the move as a “policy experiment” instead of a game-changer.
The domestic loan remains high at 85% of GDP, but is tied mainly rather than reducing assets such as housing, such as housing, cars or credit cards.
“The concern should be on the lower layers of the loan, not the headline ratio,” Feros insisted.
The fiscal deficit of Malaysia is expected to be narrowed up to 3.8% of the GDP by the end of the year, providing the government with limited rooms to support the economy in the second half of 2025.
“This means that the upcoming budget will probably be supportive, people-centered and orderly.
Firdos said, “We do not expect new broad-based taxes, although a carbon tax can be introduced in 2026,” saying that the political middle-cycle and the upcoming state elections will shape the strategy of the government.
He warned that the planned rationalization of Ron95 fuel subsidy is not clear, still under discussion with implementation details.
He said, “Skepticism will remain until we look at nuts and bolts. This government is taking a more fine approach that is beyond income, also to consider the ownership of property and debt levels,” he saw.
Firdos suggested that the fiscal strategy of the government will be shaped not only by economics but also by politics.
“Once we collide with the middle point of the political cycle, the remaining budget will generally focus on being a supporter. This means that improvements will be more gradual and calibrated, especially with state elections in Saba, Sarawak and Johor on the horizon.”
Firdos stated that China’s ability to maintain growth above 5% would help the regional trade spirit, but warned against the expectation of a major rebound spillover. “China’s strategy is still very exported and aggressive, especially in areas such as automobiles. If they remain stable, it provides some cushions, but Malaysia cannot trust China alone to raise development.”
Looking forward, Firdos insisted that the approach to Malaysia’s development is slanting in the negative side, the possibility of being unstable in external conditions.
He said, “The major challenge for businesses would be navigating high trade costs and weak global demand, while policy makers should balance fiscal consolidation with pro-goth expenses. The second half of 2025 will test the second half of the 2025 that the domestic demand is actually how flexible is,” he said.
