KUALA LUMPUR, July 25 (Xinhua) -- Economists foresee Malaysia's new measures to address rising costs as providing a near-term growth boost to the country.
TA Securities said in a note on Thursday that these new measures, including cash aids, are expected to boost consumption and raise household incomes.
The research house noted that the recent overnight policy rate (OPR) cut, alongside targeted cash assistance and other consumer-friendly initiatives, will likely support private consumption and provide a modest uplift to gross domestic product (GDP) growth in the near term.
"These announcements should help cushion the domestic economy, especially as weak external demand continues to weigh on export performance. That said, if the proposed 25 percent U.S. tariff on Malaysian goods proceeds as planned, it could pose downside risks to Malaysia's export-driven sectors and overall GDP," it said.
Nonetheless, it opined that the expected strength in domestic demand may partially offset the external drag, helping the economy stay broadly on track.
"We maintain our GDP growth forecast at 4.4 percent year-on-year for 2025, underpinned by private consumption growth of around 5 percent year-on-year," it added.
Meanwhile, MBSB Research said in a note on Thursday that the new fiscal measures could boost consumer spending by at least 2 billion ringgit (470 million U.S. dollars) to 3 billion ringgit, or adding around 1-1.5 percentage points to Malaysia's GDP this year.
"Together with the OPR reduction, we estimate the overall GDP growth forecast for 2025 may be revised up to 4.45 percent from our existing forecast of 4 percent, factoring in the stronger private consumption," said the research house.
CIMB Securities also said in a recent note that a higher propensity to consume in the B40 (bottom 40 percent) and M40 (middle 40 percent) groups, and the consumption-driven nature of the new measures concentrated in the September-December period, offer an offset to the hangover from front -- loaded exports and tariff uncertainty -- keeping Malaysia's quarterly GDP treading above the 4 percent level.
"We maintain our 2025 growth forecast at 4.3 percent, with the measures adding 0.12 percentage point to real GDP, partly mitigating potential headwinds from adverse U.S. reciprocal tariffs," said the research house.
Malaysian Prime Minister Anwar Ibrahim announced Wednesday a fresh 2 billion ringgit cash aid package, civil servant pay hikes, a reduction in RON95 petrol prices to 1.99 ringgit per liter, a toll freeze, and an expansion of the Rahmah affordable goods scheme sales to ease living costs. (1 ringgit equals 0.24 U.S. dollars) ■
