Malaysian Central Bank: 24 percent tariff rate imposed by US could hurt growth

KUALA LUMPUR: Although existing regulations would assist to reduce the effect, Malaysia’s central bank governor told Bloomberg Television on Wednesday that the United States’ 24% tariff rate on Malaysian exports might have an impact on GDP.

In an interview, Bank Negara governor Abdul Rasheed Ghaffour said that while the tariffs may have an effect on Malaysian exports, the country’s economy is diverse, with the service sector contributing 60% of GDP.

solid exports, record-approved investments, and solid domestic demand propelled Malaysia’s economy’s 5.1% growth in 2024. In light of the U.S. tariffs, the government is reevaluating its growth prediction, which was 4.5% to 5.5% this year.

Abdul Rasheed said that since the situation was uncertain, the central bank was not in a hurry to alter its own prediction. He said that in order to boost the economy and sustain the ringgit, the government must make a commitment to structural changes. With developing market currencies under pressure since the tariff announcement, the Malaysian ringgit dropped to its lowest level versus the dollar in two months on Wednesday.

According to Abdul Rasheed, the central bank anticipated that ringgit volatility would persist and was prepared to reduce any unwarranted swings. “Any currency intervention is done judiciously to ensure an orderly market,” he said. Since May 2023, Bank Negara Malaysia has maintained its benchmark interest rate at 3.00 cent.