WASHINGTON: Malaysia is preparing to revise down its 2025 economic growth forecast following new US-imposed tariffs that have clouded trade and investment prospects, Finance Minister II Amir Hamzah Azizan said during the IMF-World Bank spring meetings in Washington.
The government’s current growth target of 4.5% to 5.5% is under review, with a revised outlook expected to be released in the coming months.
“What’s transpired over the past three weeks has been probably a lot harder than what people anticipated,” Amir said in an interview. “It is likely that global trade will come down. The key question is: how deeply?”
Malaysia’s first-quarter performance fell short of expectations, even before the US introduced new tariffs on trading partners earlier this month. The International Monetary Fund has projected 4.1% growth for the country this year.
Trade Talks with US Begin This Week
Malaysia will officially begin trade negotiations with the United States on Thursday, in a bid to avoid a looming 24% reciprocal tariff, which is currently under a 90-day suspension. The meeting will feature Malaysia’s Investment, Trade and Industry Minister Tengku Zafrul Aziz and US Trade Representative Jamieson Greer.
Malaysia follows in the footsteps of Japan and Vietnam, which have also initiated formal discussions with the US.
“Let’s put it all on the table and discuss what’s fair or what’s not fair,” Amir said, while declining to specify whether Malaysia might increase purchases of US goods to help offset the trade imbalance.
While Malaysia maintains an overall trade surplus with the US, it runs a services trade deficit. Officials plan to stress Malaysia’s key role in global supply chains, particularly in semiconductors and as a base for US manufacturing operations.
Economic Strategy Amid Global Headwinds
Amir noted that while the US tariffs may dampen growth, Malaysia has room to maneuver. He pointed to fiscal space and increased investment from government-linked companies as buffers against external shocks.
Despite a recent drop in oil prices, Malaysia is moving ahead with fuel subsidy reforms slated for mid-2025, introducing a two-tiered pricing model where only the wealthiest 15% of households will pay market rates.
Amir also suggested that Malaysia could help bolster regional coordination as global trade dynamics shift.
“We must be prepared to look at what we can, so long as it doesn’t disrupt the economic structure within the country.”
As the current ASEAN chair, Prime Minister Anwar Ibrahim has pledged to lead efforts to craft a collective Southeast Asian response to the US tariff agenda.
