Fortifying Economic Foundations with Structural Reforms
Structural reforms are continuing to fortify Malaysia’s economic resilience, strengthening fiscal discipline, attracting high-quality investment, and expanding opportunities, according to the Governor of Bank Negara Malaysia (BNM), Datuk Seri Abdul Rasheed Ghaffour. Speaking at MyFintech Week 2025, he highlighted that progress in areas like energy transition and digital infrastructure is creating a more inclusive and competitive economy. The Governor stressed the importance of these reforms for both growth and currency stability, especially in an era of heightened global volatility. This strategic focus is crucial for a small, open economy like Malaysia, as it provides a necessary buffer against external shocks. By proactively implementing these measures, the nation is not just responding to current challenges but is also laying a robust foundation for sustainable long-term economic prosperity, ensuring that its economy remains dynamic and adaptable in a rapidly changing world. These reforms are a testament to Malaysia’s forward-thinking approach to economic management.
The Ringgit’s Stability and Encouraging Performance
The Governor noted that while the ringgit has been subject to global uncertainties, it has shown encouraging signs this year, partly due to these reforms attracting renewed investor interest. The ringgit’s nominal effective exchange rate (NEER) appreciated by 1.5 per cent against the currencies of Malaysia’s major trading partners in the second quarter of 2025. It also strengthened by 5.1% against the US dollar in the same period, primarily driven by a broad weakness in the US dollar. These gains are a direct result of capital inflows and a vote of confidence from international markets, which recognize the country’s sound economic fundamentals. He added that the ringgit’s stability will continue to be supported by the country’s strong economic foundations and coordinated efforts to promote balanced and orderly currency flows. This proactive approach by the central bank, which includes engaging with corporates and investors, is crucial for ensuring the orderly functioning of the domestic foreign exchange market and maintaining investor trust.
BNM’s Revised Economic Outlook and Inflation Forecast
BNM has updated its economic growth forecast for this year to a range of 4.0% to 4.8%, a downward revision from its earlier projection. This change reflects increased global trade uncertainties and geopolitical tensions. Despite this revision, the economic outlook is still bolstered by resilient domestic demand and sustained investment in key strategic sectors under the national development plans. The central bank also projects that inflation will remain moderate, with headline inflation expected to average between 1.5% and 2.3% in 2025. This revision reflects a continued easing of costs and a steady demand outlook, providing a stable and predictable environment for both businesses and consumers. By managing both growth and inflation expectations, BNM is demonstrating its commitment to steering the Malaysian economy through a period of external headwinds while ensuring the well-being of its citizens and maintaining a conducive environment for future economic expansion.
