Tengku Zafrul says US 19pc tariffs could reduce Malaysia’s projected 2025 GDP growth by as much as 1.2 percentage points

KUALA LUMPUR, Aug 19 — Malaysia’s gross domestic product (GDP) growth in 2025 could decline by between 0.6 and 1.2 percentage points as a result of the United States’ 19 per cent retaliatory tariffs, Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz has said.

“For 2026, GDP growth is also expected to dip slightly compared to 2025, as the impact of the tariffs will be felt throughout the full year,” he said in a written reply to Parliament.

He added that it was too early to provide firm and detailed projections regarding the tariffs’ impact on inflation in key sectors such as transportation, energy and food.

Tengku Zafrul was responding to a question from Betong MP Datuk Dr Richard Rapu @ Aman Anak Begri on the ministry’s assessment of the short- and long-term implications of higher global tariffs on inflation, industrial costs and consumer prices.

Last week, Bank Negara Malaysia (BNM) said it was maintaining its 2025 GDP forecast of between 4.0 per cent and 4.8 per cent, taking into account a range of possible outcomes from the tariff negotiations. BNM governor Datuk Seri Abdul Rasheed Ghaffour said the central bank had factored in a tariff assumption of between 25 per cent and 30 per cent during talks with the United States.

Tengku Zafrul meanwhile stressed that the government is committed to taking proactive and coordinated measures to mitigate the negative effects of the 19 per cent tariff, especially in critical sectors.

These measures include strengthening inter-agency cooperation through a whole-of-government approach, encouraging exporters to fully leverage Malaysia’s 18 Free Trade Agreements, and continuing with reforms to improve efficiency, automation and productivity.

“The government is confident that the initiatives planned will effectively and comprehensively mitigate the impact of the United States’ retaliatory tariffs without compromising people’s wellbeing. Ensuring access to essential goods remains the government’s top priority in formulating its policies and strategic responses to this issue,” he said.

Tengku Zafrul also reiterated that Malaysia is facing a 19 per cent tariff from the US because it refuses to cross its “red lines” in negotiations with Washington, but added that Malaysia will not take retaliatory action as the US remains a key investor and export market for both Malaysia and Asean.