By Usha Muthusamy,
KUALA LUMPUR, 12 June 2025: The World Bank has adjusted its 2025 Gross Domestic Product (GDP) growth forecast for Malaysia, revising it downwards to 3.9 percent. This new projection marks a 0.6 percentage-point reduction from its January 2025 estimate, primarily due to the unpredictable macroeconomic impacts of rising trade barriers.
The downgrade reflects a broader trend of slowing global economic growth, projected to decline to 2.3 percent in 2025—the slowest rate since 2008, excluding periods of global recession. Other ASEAN economies are also experiencing similar revisions; the Philippines and Vietnam saw their forecasts cut by 0.8 percentage points each, while Thailand’s projection fell by 1.1 percentage points. Myanmar recorded the sharpest downgrade at 4.5 percentage points.
Malaysia, with its substantial export-oriented manufacturing sector, is particularly vulnerable to resurfacing trade tensions, higher trade costs, and diminished growth in key global economies. Recent indicators of manufacturing activity, including Purchasing Managers’ Indexes (PMIs) and goods trade data, have shown a softening trend. The report specifically notes a significant weakening in new export orders for trade-exposed economies like Malaysia since November, amid increasing global trade policy uncertainty. Despite these external pressures, the World Bank noted Malaysia’s benefit from fiscal policy support, including social spending programmes and public investment.
