International News 16 May 2025
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Malaysia's economy grows 4.4% in Q1-2025, below market expectations
The Malaysian economy grew by 4.4% year-on-year in the first quarter, slightly below market expectations but in line with government estimates, according to official data released recently. Economists had forecast GDP growth of 4.5% for the January-March period. Quarter-on-quarter growth was 0.7%, rebounding from a 0.2% contraction in the previous quarter. Household consumption, labour market conditions, fiscal support and investment played key roles in growth, but setbacks in oil and gas production and a decline in car sales weighed on the growth rate. Bank Negara Malaysia expressed concern about downside risks to economic growth and indicated that growth projections for 2025 would be revised slightly below the original range of 4.5%-5.5%.
Economy Contracts, BOJ Delays Interest Rate Hike
Toyoaki Nakamura, a member of the Bank of Japan's Board of Governors, cautioned against raising interest rates due to the increasing economic pressure caused by high import tariffs imposed by the United States. He expressed concern that the uncertainty surrounding US trade policy could adversely affect business and household activity in Japan, leading to growing downward pressure on the economy. Known for his cautious approach to monetary tightening, Nakamura highlighted the potential negative impact of US tariffs on key sectors such as automobiles. He warned that a hasty rate hike amid slowing economic growth could dampen consumption and investment in the medium term, as evidenced by Japanese companies delaying investment plans due to tariff uncertainties. Nakamura stressed that an aggressive tariff policy could trigger a damaging cycle of falling demand and falling prices, which would hurt growth. His call for caution in deciding the next rate hike coincided with Japan's first economic contraction.
https://internasional.kontan.co.id/news/ekonomi-kontraksi-boj-bakal-menunda-kenaikan-suku-bunga
Low Purchasing Power and Exports Keep Japan's Economy in Contraction
Japan's economy contracted in the first quarter of 2025, the first contraction in a year and more severe than expected, reflecting the fragility of the recovery amid US President Trump's tariff policies. Real GDP contracted at an annual rate of 0.7%, well below the expected 0.2% decline, with weakening household consumption and exports being the main drivers. This economic slowdown highlights Japan's dependence on external demand and its vulnerability to external shocks such as tariffs. Household consumption remained flat, falling short of expected growth, while investment showed signs of weakness. The country's growth drivers, particularly exports and consumption, are weakening, leaving Japan exposed to uncertainties in the global market.