US Tariffs Offer Short-Term Gains for Malaysia, Says MARC Ratings

MARC Ratings Bhd stated that, at least initially, Malaysia will profit from the United States' broad-based tariffs.

Ray Choy, its head economist, pointed out that Malaysia, ASEAN, and Asia (apart from China) had profited from the trade diversion brought about by US tariffs.

In terms of GDP growth, Choy stated that Malaysia's growth is anticipated to stay over 5.0% in 2025, which is comparatively higher than the 4.5% growth estimated by ASEAN and the 4.5% growth rate anticipated by China. Additionally, he pointed out that global growth is predicted to stay consistent overall in 2025, but at a somewhat slower rate of 3.2%.

Choi said, "US growth is likely to decelerate in 2025 to 2.2 per cent, owing to the cumulative effect of interest rate hikes by the US Federal Reserve (Fed). The expectation of lower interest rates in the US is driven by the higher unemployment rate and a gradual slowdown in overall GDP growth”

Regarding inflation, he said that the global interest rate environment is still favorable for 2025, which will further accelerate Malaysia's growth through more trade diversification and investment.We anticipate that the large increase in investments over the last four years will continue into 2025, since it has resulted in notable improvements in gross fixed capital formation.

Rajan Paramesran, the CEO of MARC Ratings, stated that the corporate credit prognosis for 2025 is largely stable and bolstered by expansion and advancement in important areas.

"Although there have been sharp swings in the ringgit that have led to significant forex gain for some and losses for others, our view is that the uptrend for corporate earnings will continue in 2025”, Rajan Paramesran said.