UOB, Maybank lower Malaysia growth forecasts on Trump tariffs

Both banks see a possibility of an interest rate cut by Bank Negara Malaysia this year

UOB views the tariff implication on consumer price inflation in Malaysia as small, with supply-driven factors and potential excess supply dumping activities neutralising the effects. PHOTO: EPA-EFE

Published Fri, Apr 4, 2025 · 04:45 PM

[KUALA LUMPUR] Malaysia is projected to post a slower economic growth in 2025 as reciprocal tariffs from the US impact exports, according to two of South-east Asia’s biggest lenders.

United Overseas Bank lowered Malaysia’s gross domestic product growth forecast to 4 per cent from 4.7 per cent, while Malayan Banking cut its forecast to 4.3 per cent from 4.9 per cent. Both banks see a possibility of an interest rate cut by Bank Negara Malaysia this year.

The 24 per cent reciprocal tariff imposed by the US on Malaysian products is within UOB’s expectation, economists Julia Goh and Loke Siew Ting said in a note. Still, the South-east Asian country will also be impacted by stiffer levies imposed on major trading partners like China, the EU and Japan.

“The risks of escalation and retaliation by other countries have risen,” they wrote. “This would impede global trade, growth, and investments more than previously anticipated though not to the extent of an outright recession just yet.”

UOB views the tariff implication on consumer price inflation in Malaysia as small, with supply-driven factors and potential excess supply dumping activities neutralising the effects.

Maybank’s downgrade for Malaysia is among the largest in the region along with Vietnam and Singapore due to the country’s heavier reliance on trade, analysts including Chua Hak Bin and Suhaimi Ilias wrote in a separate note. Any additional US tariff on semiconductors could also impact Malaysia, they said.