The revision comes in response to blanket tariffs from the US, which include a 24% levy on Malaysian goods that pose a threat to the nation’s export-driven economy, reported Bernama.
To cushion the blow, RHB IB said it expects Bank Negara Malaysia to consider a 25 basis point cut in the overnight policy rate in the second half of 2025, particularly if growth dips below the official target range of 4.5% to 5.5%.
RHB IB said its revision took into account the impact of recent reciprocal tariffs on Malaysia, compounded by higher US tariffs on China.
“We anticipate heightened headwinds for the economy – particularly within the trade and manufacturing sectors – beginning in the second quarter of 2025 as the negative repercussions of these tensions become more pronounced,” it added in a research note.
“In 2024, Malaysia recorded a goods surplus with the US amounting to RM72.38 billion. Based on a conservative price elasticity of demand of -0.5, the new US tariff could reduce Malaysian exports to the US by about 12%, translating to an RM8.7 billion shortfall,” it said.
RHB IB said while Malaysia’s direct trade with the US only comprises about 10% of total trade volume and 11.6% of total exports, the effects are compounded by indirect pressures via global supply chains and demand slowdown in key economies such as China and the US.
The investment bank said to mitigate the impact of these tariffs, Malaysia should consider diversifying its export markets by prioritising high-growth regions and leveraging existing free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
“Malaysia will also foster new partnerships within Asean and enhance its supply chain resilience by accelerating the implementation of key industrial policies like the New Industrial Master Plan 2030 and the National Energy Transition Roadmap,” it said.
Malaysia was hit with a 24% reciprocal tariff by the US, effective April 9.
According to an executive order signed by US president Donald Trump on Wednesday, Malaysia is one of 49 countries slapped with the reciprocal tariff.
The other countries include Cambodia (49%), Laos (48%), Vietnam (46%), Myanmar (45%), Thailand (37%), China (34%), Indonesia (32%), Brunei (24%) and the Philippines (18%).