GEORGE TOWN: Affin Bank Bhd expects Malaysia's economy to grow further by 5.2 per cent this year compared to its 5.0 per cent estimate in 2024.

The bank said the projection is in line with the Finance Ministry's (MoF) forecast of between 4.5 per cent and 5.5 per cent.

Group chief economist Alan Tan said this year will bring steady economic growth, especially for an open economy like Malaysia because its electrical and electronics (E&E) exports are expected to rebound in tandem with global semiconductor sales.

"Export figures in 2023 were not very good but they began to recover in 2024, supported by global semiconductor sales. They will likely continue to recover going into 2025, we are seeing a pickup in demand for semiconductors.

"Malaysia is an open economy. We have a lot of high-class electronic firms based in Penang that contribute to Malaysia's E&E exports. Going into 2025, we think this trend will continue," he said in a briefing "Malaysia's Economic Outlook 2025" during the bank's Chinese New Year 2025 celebration, here last night.

Tan said the local economy is poised to benefit from domestic demand due to stable labour market conditions and household spending.

On US President-elect Donald Trump's intention to impose tariffs on China and its global economic implications, Tan said Malaysia would likely benefit because of the China plus one strategy which involves diversifying its investments and manufacturing operations out of China into other countries.

"We will continue to see trade diversion with exporters, companies in China relocating their plants to Asean like Malaysia to escape tariffs. This could continue. Therefore, Malaysia should continue to benefit," he said.

On the ringgit, Tan said the bank sees room for the local note to end 2025 at RM4.10 to the US dollar. It anticipates the US Federal Reserve to continue cutting rates.

As for the overnight policy rate (OPR), it is expected to remain stable, thus narrowing the interest differentials between local rates and the US Fed rate.

"This will bring about some ringgit inflows," he added.

Meanwhile, Affin Bank president and group chief executive officer Datuk Wan Razly Abdullah Wan Ali said the group will intensify its commitment to sustainability, financial inclusion and corporate social responsibility.

He said the group's sustainable financing was 10.2 per cent of the total loan portfolio as of the third quarter of 2024, with a 2028 target of 25 per cent.

TAGS: Affin Bank Bhd, anticipate, recession, economic growth, open economy