Malaysia’s domestic spending, the primary driver of the nation’s GDP growth in 2025, faces challenging times ahead due to a potential export slowdown triggered by an escalating global tariff war.
A research center warned that weaker exports could slash business loan demand, increase unemployment, and dampen retail spending. Companies supplying exporters may face reduced orders, impacting operations and investment.
Economic Lifeline
Historical data shows sharp export declines, like those in 2009 and 2020, dragged GDP into negative territory and curtailed domestic demand.
To mitigate, the government is urged to delay policy changes, such as subsidy cuts or tariff hikes, as foreign goods may flood the market, threatening local industries. The GDP growth forecast has been cut to 4%, reflecting heightened economic uncertainty.
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