Malaysia’s GDP in 2025 is projected to shrink by 0.6–1.2 percentage points following the United States’ 19% retaliatory tariffs, said Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz.
Malaysia’s GDP to Shrink up to 1.2% from US Tariffs in 2025
The impact is expected to continue into 2026, though inflation effects on essentials remain uncertain. Despite the setback, Bank Negara Malaysia has maintained its GDP projection at 4.0–4.8%, factoring tariff risks.
Tengku Zafrul stressed that Malaysia will not retaliate, as the US remains a vital investor and trading partner. Instead, the government will mitigate impacts through reforms, automation, Free Trade Agreement utilisation, and a whole-of-government strategy to safeguard growth.
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