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Headline: Bank Negara Malaysia Reports April 2025 Economic Highlights
April 2025 marked a steady inflation rate for Malaysia, with the headline inflation holding firm at 1.4%, as announced by Bank Negara Malaysia (BNM). The core inflation, however, slightly increased to 2.0% from 1.9%, driven by price hikes in various sectors, namely mobile communication services, jewellery and watches, air passenger transport, personal care, social protection, food and beverage, and restaurant and accommodation services. The increase was partially offset by lower inflation in fuels, lubricants, and fresh vegetables due to easing costs.
BNM also reported a substantial 16.4% growth in gross exports for April, primarily due to the robust expansion in electrical and electronics (E&E) exports and a rebound in non-E&E and commodities exports. Imports, on the other hand, expanded sharply by 20% in the same month, driven by a sharp growth in capital imports. While intensified trade tensions may affect exports and increase downside risks, the sustained global demand for E&E products and Malaysia's integral role in the global supply chain are expected to cushion the export sector.
Regarding credit growth, BNM reported that credit to the private non-financial sector grew by 5.5%, supported by steady growth in outstanding loans and a pickup in outstanding corporate bonds. Growth in business loans moderated slightly to 4.6%, reflecting slower loan growth in the services sector. Demand for business financing remained robust across both small and medium enterprises (SMEs) and non-SMEs. Concurrently, household loan growth remained steady at 6.0%.
Gross and net impaired loans ratios remained stable at 1.4% and 0.9%, respectively. The loan loss coverage ratio, including regulatory reserves, remained prudent at 131.0% of gross impaired loans, compared to the previous month.
The central bank noted that the global financial conditions became more volatile in response to tariffs announcements by the United States (US) administration, causing global investor sentiment to turn cautious amid rising concerns over a more subdued US economy and its potential negative spillovers to other economies. As a result, the ringgit appreciated by 2.7% against the US dollar. Additionally, the FTSE Bursa Malaysia KLCI rose by 1.8% (regional average: 1.1%), while the yield on 10-year Malaysian Government Securities (MGS) declined by 11.0 basis points (regional average: -14.7 bps), aligning with global bond yield movements. The trend was predominantly driven by net foreign inflows into the bond market amid heightened global risk aversion. Lastly, the banking system showed healthy liquidity buffers, with an aggregate liquidity coverage ratio of 155.8%.
Sources: Bernama, CIMB Investment Bank, AMANAH Research, Maybank Investment Bank, RHB Research.
- The government of Malaysia is closely monitoring the rising inflation, particularly in sectors such as mobile communication services, jewellery and watches, transport, and food and beverage, following the report by Bank Negara Malaysia (BNM).
- The economy of Malaysia, as stated by BNM, experienced a substantial 16.4% growth in gross exports in April 2025, chiefly due to the expansion in electrical and electronics (E&E) exports and a rebound in non-E&E and commodities exports.
- Kuala Lumpur-based businesses, including those in the service sector, may experience slower loan growth due to the moderation in business loans to 4.6%, as reported by BNM in their April 2025 economic highlights.
- The environment for Malaysian businesses, as indicated by various financial sources such as CIMB Investment Bank, may be influenced by the global financial volatility caused by tariff announcements by the US administration, leading to a cautious investor sentiment and potential negative spillovers to other economies.
- In general news, the central bank of Malaysia, Bank Negara Malaysia, stated that the regional average for the FTSE Bursa Malaysia KLCI was 1.1%, while the yield on 10-year Malaysian Government Securities (MGS) decreased by 11.0 basis points, aligning with global bond yield movements.
