KUALA LUMPUR: Malaysia’s economic growth is projected to decelerate to 4.9 percent in 2025, down from an expected 5.2 percent in 2024, according to a recent report by KSI Strategic Institute for Asia Pacific. The report highlights the impact of domestic policies and external global challenges, including potential tariff threats from U.S. President-elect Donald Trump.

According to Namibia Press Agency, the think tank’s analysis emphasizes that Malaysia, as an open economy, could be significantly affected by international trade tensions. Despite these challenges, domestic demand is predicted to remain the primary driver of economic growth.

The think tank’s report notes that 2024 has been notably positive for Malaysia, bolstered by strong domestic demand, vigorous investment activities, increased external demand, and political stability. However, the outlook for the Malaysian ringgit (MYR) remains uncertain. The currency’s performance will be influenced by factors such as global economic conditions, domestic growth trends, and shifts in commodity prices.

The report suggests that with moderate global growth, stable oil prices, and strong export demand, the MYR might experience a gradual appreciation. The currency is expected to trade within a range of 4.00 to 4.20 against the US dollar in 2025. Should the Malaysian economy continue to perform well and global demand for its exports remain robust, the MYR could strengthen towards the upper end of this range.

Nonetheless, the think tank warns that geopolitical tensions, potential increases in US interest rates, and domestic inflationary pressures could lead to currency volatility. These factors could pose significant challenges to maintaining a stable economic trajectory for Malaysia in the coming years.