Malaysia is revising down its growth outlook as tariffs weigh on the economy, while seeking a “fair” deal in trade talks that kicked off with US officials this week, according to a top official.
The government is currently reviewing its official growth projection of 4.5% to 5.5% for 2025 after the US imposed levies earlier this month, creating uncertainty for investment and trade, said Malaysia Second Finance Minister Amir Hamzah Azizan.
“What’s transpired over the past three weeks has been probably a lot harder than what people anticipated,” he said Thursday in an interview during the IMF-World Bank spring meetings in Washington. “It is likely that global trade will come down. The key question is: how deeply?”
The government is revising the economic outlook and will release it in the coming months, Amir said. Malaysia grew at a slower-than-expected pace in the first quarter, even before the US announced tariffs on trading partners. The International Monetary Fund expects the Southeast Asian economy to expand 4.1% this year.
Malaysia held trade talks with the US on Thursday, seeking to avoid a 24% “reciprocal” tariff from the world’s largest economy that’s currently on hold for 90 days. Officials, led by Investment, Trade and Industry Minister Zafrul Aziz, met with US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer. It’s the latest Asian nation to begin official discussions with the US, joining Japan and Vietnam.
Malaysia said it’s open to more talks to narrow the US trade deficit with the country, address non-tariff barriers and explore a potential bilateral trade agreement, according to a statement by the Investment, Trade and Industry Ministry on Friday.
“We must be prepared to look at what we can, so long as it doesn’t disrupt the economic structure within the country,” Amir said, adding that erasing the trade gap would be difficult and declining to say whether the nation would offer to buy more US goods. “Let’s put it all on the table and discuss what’s fair or what’s not fair.”
Malaysia is prepared to weather growth hits, Amir said, pointing to fiscal spending room and increased investment from government-linked firms. And despite a decline in oil prices, the nation still plans to go ahead with petrol subsidy reforms in mid-2025, with a two-tier system where only the wealthiest 15% in the country pay market rates.
The government is confident of achieving its target to narrow the budget gap to 3.8% of gross domestic product this year, from 4.1% in 2024, as it widens its tax base, Amir said.
Amir added the country can also boost regional coordination and trade as global headwinds mount. Prime Minister Anwar Ibrahim, who doubles as finance minister, has said that Malaysia will lead efforts to coordinate a regional response by Southeast Asia toward US tariffs. Malaysia is the current chair of the Association of Southeast Asian Nations or ASEAN group of 10 countries. – Bloomberg
