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BUSINESS • 30/05/2025 03:30 PM

Malaysia’s GDP Growth Could Rebound To 4.6 Pct if US Tariffs Lifted - MIDF

KUALA LUMPUR, May 30 (Bernama) -- Malaysia’s economic growth could rebound to the earlier projection of 4.6 per cent from 4.0 per cent for 2025 if the sweeping US tariffs were removed, according to MIDF Amanah Investment Bank Bhd.

Its research arm MIDF Research said easing concerns over reciprocal tariffs and a more favourable demand from the US bode well for Malaysia’s external trade performance especially electrical and electronic products.

“Production activity will also strengthen in response to the improvement in external demand, on top of the continued expansion in domestic consumption.

“Given the brighter trade outlook, we estimate an additional uplift of around +0.6 percentage points to Malaysia’s gross domestic product (GDP) growth,” it said in a note today.

MIDF said if the reciprocal tariffs were to be removed and no longer factored into import costs, it expect a more positive outlook for the US consumption expenditures.

“Lower import cost would reduce the risk of price pass-through, therefore reducing concerns over elevated inflation.

“This will improve consumer sentiment and encourage higher consumption. In this scenario, we estimate the US GDP growth could grow stronger at 1.8 per cent in 2025, compared to a baseline estimate of 1.4 per cent,” it said.

However, MIDF said downside risks remain, particularly if the trade tensions heighten again.

“Apart from challenging the international trade court ruling, the US government may introduce more trade restrictions through non-tariff measures.

“While such measures may help narrow the US trade deficit, they are however less supportive of fiscal consolidation compared to traditional tariffs or levies,” it said.

Earlier, US Court of International Trade had decided the tariffs announced by President Trump to be illegal.

As expected, US President Donald Trump's administration has challenged the trade court ruling.

Following from the appeal by President Trump’s administration, a federal appeals court granted the request to temporarily pause the lower court ruling.

This means that the tariffs are back in place while the appeal process runs its course. President Trump’s administration had earlier told the US Court of Appeals for the Federal Circuit that it would seek “emergency relief” from the Supreme Court as soon as Friday if the tariff ruling was not quickly put on pause.

MIDF said even if the tariffs are rescinded after exhausting all possible legal avenues, there are other methods that Trump can enact to continue with his tariff agenda such as replacing existing tariffs, investigate unfair trade practices, expand national security tariffs and Impose anti-discrimination tariffs.

-- BERNAMA

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