Malaysia’s central bank releases annual report for 2024

Key Concepts:

• GDP Growth Projection (2025)
• Domestic Demand
• Global Headwinds
• Financial Conditions
• Credit Growth
• Ringgit Performance
• E&E (Electrical and Electronics) Value Chain
• Semiconductor Exports
• Inflation Forecast (Headline & Core)
• Regulatory and Conduct Policies
• Financial System Stability
• Bank Negara Malaysia (BNM) Assets and Profit

1. Economic Growth Projections and Drivers:

• GDP Growth: Malaysia's economy is projected to expand between 4.5% and 5.5% in 2025, according to Bank Negara Malaysia's (BNM) 2024 annual report.
• Primary Growth Driver: Domestic demand is expected to be the primary driver of growth, offsetting persistent global headwinds.
• Supportive Financial Conditions: Financial conditions are expected to remain supportive, with credit growth fueled by rising incomes and steady domestic activity.

2. 2024 Economic Performance:

• GDP Growth: The Malaysian economy expanded by 5.1% in 2024.
• Inflation: Inflation was contained at 1.8% in 2024.
• Ringgit Performance: The Ringgit strengthened by 2.7% against the US dollar and 7.5% against Malaysia's major trading partners, indicating renewed investor confidence.

3. E&E Sector and Semiconductor Exports:

• Global E&E Value Chain: Malaysia's position in the global E&E value chain continues to be a bright spot.
• Demand Drivers: Strong global demand for AI, cloud computing, and related peripherals is expected to support E&E exports.
• Semiconductor Significance: Semiconductors alone account for 25.7% of Malaysia's total exports.
• Strategic Imperative: The domestic E&E industry must capitalize on emerging opportunities by investing in ecosystem enhancement, developing a deep talent pool, and encouraging innovation.
• Geopolitical Risks: Ongoing geopolitical uncertainties, including tariffs and trade restrictions, pose a risk to the semiconductor industry.

4. Inflation Outlook:

• Headline Inflation Forecast: Headline inflation is forecast between 2% and 3.5% for the coming year.
• Core Inflation Projection: Core inflation is projected at about 1.5% to 2.5%.
• Drivers: The uptick in inflation is driven by global cost factors.
• Mitigating Factors: The lack of strong demand-side pressures should help keep price growth in check.

5. Regulatory and Conduct Policies:

• Focus: Bank Negara Malaysia rolled out several key regulatory and conduct policies aimed at strengthening financial stability and consumer protection in 2024.
• Financial System Stability: Malaysia's financial system remains sound and well-capitalized, with banks holding adequate buffers to withstand potential shocks.

6. Bank Negara Malaysia's Financial Position:

• Total Assets: Bank Negara Malaysia ended the year with more than $140 billion US in total assets.
• Net Profit: BNM recorded a net profit of close to $3 billion.

7. Conclusion:

The Malaysian economy is projected to continue its growth trajectory, driven primarily by domestic demand and supported by its strong position in the global E&E value chain. While global headwinds and geopolitical uncertainties persist, strategic investments in the E&E sector and prudent monetary policies are expected to maintain economic stability. The financial system remains robust, and Bank Negara Malaysia is well-positioned to navigate potential challenges.