From left: Moderator Dr Ray Choy, Chief Economist at MARC Ratings Berhad; Professor Dr Bridget Welsh, Honorary Research Associate at the University of Nottingham Asia Research Institute Malaysia; Mohd Fraziali Ismail, Assistant Governor of Bank Negara Malaysia (BNM); Professor Dr Ong Kian Ming, former Deputy Minister of the Ministry of Investment, Trade and Industry (MITI) and currently Adjunct Professor at Taylor’s University; and Arshad Mohamed Ismail, Group Chief Executive Officer of Malaysian Rating Corporation Berhad (MARC); at the recent forum “An Afternoon Talk with MARC: Global Economic & Market Outlook, Geopolitics and Tariff Agendas”, organised by MARC.
Malaysian Rating Corporation Berhad (MARC) brought together leading voices in finance, policy, and economics at its forum, An Afternoon Talk with MARC: Global Economic & Market Outlook, Geopolitics and Tariff Agendas, held on 11 July 2025 at M Resort & Hotel Kuala Lumpur. Discussions during the event focused on navigating macroeconomic volatility, geopolitical tensions, and trade realignments shaping the second half of 2025 and beyond. The event was attended by C-suite executives and senior management from financial institutions, government-linked companies (GLCs), and corporates.
Opening the event, Arshad Mohamed Ismail, MARC’s Group Chief Executive Officer, said that rising global uncertainty is blurring the lines between economic and geopolitical domains, with implications for business planning, policymaking, and financial stability.
Arshad noted that the intersection of economic and geopolitical risks has become increasingly pronounced, with tariffs now being used as strategic instruments in US foreign policy, and energy market disruptions reverberating across global supply chains. He pointed out that the US’ current tariffs are no longer merely economic instruments but reflect broader political and strategic agendas.
“For corporations and financial institutions, understanding and navigating this complexity is vital for sound planning and risk management,” he said.
He stressed that for open economies like Malaysia, the current global climate demands a more agile and multidimensional approach to competitiveness.
“We must move beyond thinking of competitiveness purely in terms of exports or cost. In today’s world, it’s about resilience, diversification, and building strategic alliances,” Arshad said.
Following the opening address, Dr Ray Choy, Chief Economist of MARC Ratings Berhad, delivered a presentation on the global economic outlook for the second half of 2025. He highlighted diverging monetary policy paths, ongoing tariff wars, and the implications of geopolitical realignment on trade flows and investment sentiment. Global economic growth is projected to decelerate over 2025–2026, with major economies expected to experience slower momentum.
While the eurozone is anticipated to see a gradual rebound supported by easing inflation, the US faces challenges tied to weakening consumer confidence and a gradual rise in unemployment. In China, consumer sentiment remains fragile despite a mild recovery in the real estate sector. Elevated geopolitical tensions and sustained trade policy uncertainty continue to weigh on global investment flows and oil markets.
On trade dynamics, Dr Ray Choy noted that the average US tariff rate since 1989 stands at 2.7%, although this will increase significantly and settle in the teens given the ongoing trade war. Nonetheless, as of 10 July 2025, data shows that the Trump administration reduced initial tariff rates on 59.1% of its trading partners, with average tariff increases of 1.5% and reductions of 7.3%, reflecting a complex recalibration of trade policy and hope for better outcomes on future negotiations.
Turning to the Malaysian outlook, the economy is forecast to grow by 4.4% in 2025, driven by resilient domestic demand, including investment activity, private consumption, and a sustained recovery in tourism. Despite an upward adjustment in the Sales and Service Tax, inflation is expected to remain contained. Monetary policy globally is shifting to a more dovish stance, and Bank Negara Malaysia (BNM) recently reduced the Overnight Policy Rate to 2.75% in July, following the European Central Bank’s easing cycle in 2024. Markets are also pricing in two interest rate cuts by the US Federal Reserve by the end of 2025. The Malaysian bond market remains stable, underpinned by strong foreign demand for government securities and a positive medium-term growth outlook.
A key highlight of the event was the expert panel session titled “US Tariffs & Geopolitics: Demystifying Nested Agendas”, moderated by Dr Ray Choy. The session featured a distinguished line-up of panellists — Encik Mohd Fraziali Ismail, Assistant Governor of BNM; Professor Dr Ong Kian Ming, former Deputy Minister of the Ministry of Investment, Trade and Industry (MITI) and currently an Adjunct Professor at Taylor’s University; and Professor Dr Bridget Welsh, Honorary Research Associate at the University of Nottingham Asia Research Institute Malaysia. Together, they explored the intensification of trade tensions, US tariff strategies, supply chain recalibration, and the regional response from ASEAN economies.
The panel examined the far-reaching consequences of recent US trade policies, particularly those adopted under the Trump administration, which were characterised as being driven more by short-term political motives and optics rather than by coherent, long-term economic planning. Nonetheless, these policies are exerting real and lasting pressure on global supply chains, prompting businesses and governments alike to reassess their dependencies and strategic trade relationships.
In this evolving context, the panel discussed the emergence of a “US-minus” trade landscape — one in which regional blocs such as Southeast Asia, the Gulf Cooperation Council (GCC), and the European Union are actively deepening their economic linkages in response to US protectionism and unpredictability. China, in particular, is expected to accelerate its economic and diplomatic engagement with ASEAN as part of a broader strategy to mitigate US-centric risk and build alternative trade corridors.
Focusing on Malaysia, panellists agreed that retaliation is unlikely to be effective or desirable. A negotiated, sector-specific approach was identified as the more strategic path forward. Key among Malaysia’s priorities should be securing exemptions from semiconductor-related tariffs, given the sector’s importance to the national economy and its role in global technology supply chains. Additionally, there was strong emphasis on maximising existing trade frameworks — such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — to boost exports, particularly in high-impact sectors such as palm oil. Malaysia was also encouraged to continue pursuing new free trade agreements (FTAs) to diversify its trade portfolio and enhance long-term resilience.
On monetary and financial policy, the panel observed that the ringgit remains predominantly influenced by external factors, including global monetary tightening, capital flows, and investor sentiment. While domestic policy can play a role in managing short-term volatility, its ability to counteract structural global trends is limited. Malaysia’s strategy of building deeper financial market liquidity and diversifying its currency exposure was seen as pragmatic. Importantly, it was stressed that this effort should not be misconstrued as a move towards de-dollarisation, noting that the US dollar remains the dominant global reserve currency and is unlikely to be replaced in the near future.
The macroeconomic outlook remains cautiously optimistic. While global trade may face intermittent disruptions driven by geopolitical uncertainties, Malaysia’s underlying fundamentals remain sound. Structural reforms aimed at improving governance, strengthening institutions, and enhancing competitiveness are progressing steadily. These reforms should remain a national priority, even as the country navigates short-term external pressures. The stability of Malaysia’s growth and inflation trajectories further supports a resilient economic position moving forward.
Strategically, the panel concluded that tariffs are increasingly being used as instruments of political leverage rather than purely economic tools. In this context, Malaysia must take a dual-pronged approach — responding tactically in the near term while undertaking deeper structural adjustments for the future. This includes investing in supply chain diversification, strengthening regional partnerships, and reducing reliance on any single major power. As global power dynamics shift — particularly with growing alignment around China — and as attention intensifies around other geopolitical flashpoints, such as the Middle East and Ukraine, Malaysia must also manage its diplomatic positioning carefully. Balancing economic interests with foreign policy independence will be crucial in preserving Malaysia’s strategic autonomy and securing its role in an increasingly multipolar world.
In a show of support for social enterprise, attendees received handmade batik passport holders produced by Komuniti Tukang Jahit (KTJ), a local platform that empowers B40 women in Malaysia through tailoring and entrepreneurship training.
The forum is part of MARC’s broader commitment to fostering informed dialogue and continuously equipping stakeholders with actionable insights amid ongoing global transformation.