KUALA LUMPUR: The International Monetary Fund (IMF) has lowered Malaysia’s real gross domestic product (GDP) growth projection for 2025 to 4.1%, down from its earlier forecast of 4.7%, citing broader regional and global economic headwinds.
This adjustment, published in the IMF’s April 2025 World Economic Outlook report titled “A Critical Juncture Amid Policy Shifts,” aligns with similar downward revisions across Southeast Asia. The Fund also anticipates Malaysia’s economy will grow by 3.8% in 2026.
The revised outlook comes amid a cut in the global GDP growth forecast to 2.8% for 2025—a 0.5 percentage point drop from the IMF’s January estimate—highlighting the fragile state of the global recovery.
Regionally, Indonesia’s 2025 growth forecast has been lowered to 4.7% from 5.1%, the Philippines to 5.5% from 6.1%, and Thailand to 1.8% from 2.9%. The IMF attributes the downgrades to heightened policy uncertainty, particularly from escalating trade tensions.
“Major policy shifts are reshaping the global trade landscape and reigniting uncertainty,” the IMF said, pointing to the US’s recent tariff escalations. The latest round of widespread tariffs announced on April 2 triggered steep declines in global equity markets and surging bond yields, although partial recoveries followed subsequent policy clarifications.
Despite the challenges, the Fund noted that signs of economic stabilisation had begun to emerge through 2024. Inflation has been moderating, labour markets are nearing pre-pandemic levels, and central banks are approaching their inflation targets.
In terms of industrial production, the IMF highlighted diverging recovery trajectories. While output has surged in China, smaller EU nations, and ASEAN-5 economies, it remains subdued in Japan and major EU economies. The US, meanwhile, has seen a stronger rebound in its industrial sector compared to other advanced economies.
Commodity prices are also expected to shift notably in 2025. Fuel prices are projected to decline by 7.9%, with oil and coal prices falling by 15.5% and 15.8% respectively. However, natural gas prices are expected to jump 22.8% due to colder-than-anticipated weather and disruptions in Russian supply routes. Non-fuel commodity prices are forecast to rise by 4.4%.
The IMF concluded that the global economy remains at a critical juncture, as it grapples with the aftershocks of past disruptions and navigates ongoing policy realignments.
