KUALA LUMPUR, May 30 — Malaysia’s economic growth could rebound to the earlier projection of 4.6 per cent from 4 per cent for 2025 if sweeping tariffs by the United States were removed, said the MIDF Amanah Investment Bank Bhd.
Its research arm 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 expects a more positive outlook for the US consumption expenditures.
“Lower import costs 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 with 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, the US Court of International Trade had decided the tariffs announced by US President Donald Trump to be illegal.
Trump’s administration has challenged the trade court ruling.
Following the appeal by Trump’s administration, a federal appeals court granted the request to temporarily pause the lower court ruling.
This means the tariffs are back in place as the appeal process runs its course. Trump’s administration earlier told the US Court of Appeals for the Federal Circuit that it would seek “emergency relief” from the Supreme Court as soon as today 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MIDF said even if the tariffs are rescinded after exhausting all possible legal avenues, there are other methods Trump can enact to continue with his tariff agenda, such as replacing existing tariffs, investigating unfair trade practices, expanding national security tariffs, and imposing anti-discrimination tariffs.
— Bernama
