KUALA LUMPUR, Aug 19 — Malaysia’s gross domestic product in 2025 is projected to shrink by between 0.6 and 1.2 percentage points due to United States’ 19 per cent retaliatory tariffs, according to Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abd Aziz
“For 2026, GDP growth is also expected to decline slightly compared with 2025, as the impact of the tariffs will be felt throughout the year.
“As for their effect on inflation in essential sectors such as transportation, energy, and food, it is still too early to provide precise and conclusive assessments,” he said in a written parliamentary reply.
He was responding to Betong MP Datuk Dr Richard Rapu @Aman Anak Begri from Gabungan Parti Sarawak 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 maintained its 2025 GDP projection of between 4.0 per cent and 4.8 per cent, considering a range of possible outcomes from tariff negotiations.
BNM governor Datuk Seri Abdul Rasheed Ghaffour said BNM has taken a tariff assumption of between 25 per cent and 30 per cent during tariff negotiations with the United States.
Meanwhile, Tengku Zafrul said Putrajaya is determined to pursue proactive and integrated strategies to reduce the adverse effects of the 19 per cent tariff on the economy, particularly in critical sectors.
He said these steps include strengthening inter-agency collaboration through a whole-of-government approach, encouraging exporters to make full use of Malaysia’s 18 Free Trade Agreements, and pressing on with reforms to boost efficiency, automation, and productivity.
“The government is confident that the planned measures will effectively and comprehensively address the negative impacts of the United States’ retaliatory tariffs without compromising the people’s well-being.
“Ensuring access to essential needs remains the government’s top priority in formulating policies and strategic initiatives to deal with this issue,” he said.
Yesterday, Tengku Zafrul conceded that Malaysia faces a 19 per cent tariffs from the United States since it refuses to cross the “red lines” in its negotiations with Washington,
Tengku Zafrul said that Malaysia will however not retaliate since the US is too important as an investor and export destination for Malaysia and Asean.
