HSBC chief Asia economist and co-head of global research Asia, Frederic Neumann
KUALA LUMPUR: Rising United States (US) tariffs pose challenges to Asian economies, but they also present opportunities for regional integration and investment diversification, according to HSBC's chief Asia economist and co-head of global research Asia, Frederic Neumann.
He said the US’ move to raise its tariffs could also open avenues for deeper regional integration and diversified foreign direct investments (FDIs), citing the Johor-Singapore Special Economic Zone as an example of efforts to remove trade barriers and deepen economic ties.
"This is a very promising development, where you see economies coming together and trying to remove trade barriers, collaborating to boost economic integration.
"I think we will see more of that. So, the challenge that comes from trade restrictions in the US could propel more economic, trade and investment integration within Asia," he said.
Speaking at the HSBC Asian Outlook 2025, held online today, Neumann noted that when trade restrictions rise, cross-border FDIs can increase as well because companies will need to diversify their supply chain risks.
Meanwhile, he said HSBC has forecast Malaysia’s gross domestic product growth to be at 4.8 per cent in 2025, slightly above the consensus.
He said the positive outlook is supported by a strong inflow of foreign direct investment, significantly contributing to overall capital formation.
"On the export side, Malaysia has lagged slightly behind the electronics recovery in Northeast Asia. However, there is hope for some catch-up over the course of this year," he said.
Meanwhile, HSBC head of Asian FX Research, Joey Chew said HSBC expects the ringgit to stabilise at RM4.60 against the US dollar by the end of this year, in view of the existing measures put in place by the authorities.
"But I think relative to some other pairs, like the Singapore dollar, Korean won, and Taiwan dollar, it's actually like to do so at a relatively slow pace, partly because of the ongoing measures that have been in place since last year,” she said.
Chew noted that many government-linked companies have been encouraged to repatriate their foreign earnings.
Additionally, local companies are also being urged to focus on investing locally rather than expanding overseas.
"All these measures can help to cushion the US dollar impact on the ringgit," she added.
Meanwhile, on Bursa Malaysia's performance, HSBC’s head of Asia Pacific equity strategy, Herald van der Linde said the Kuala Lumpur Composite Index (KLCI) is expected to reach 1,850 points by the end of this year, benefitting from global supply chain shifts, particularly in high-tech industries. - Bernama
