UEM EDGENTA BERHAD Integrated Annual Report 2025 62 MACROECONOMIC CHALLENGES Overview The global economy remained volatile in 2025, as trade- and tariff-related uncertainties dampened investment activity, while cost pressures persisted across labour, utilities and other key input areas. While the impact of the US government’s tariffs was more muted than previously feared due to the front-loading of trade activity, underlying global economic fundamentals remain a cause for concern. In addition, currency volatility across many of the Group’s operating markets continued to weigh on business confidence and financial planning. Risks • Heightened macroeconomic uncertainty may slow customer decision-making and defer project spending, impacting the Group’s revenue profile and balance sheet. • Inflationary pressures and tariffs may increase cost inputs and erode profit margins. • Unfavourable foreign exchange movements may pressure margins on overseas projects, particularly for longer-duration programmes. Opportunities • Malaysia and the ASEAN region are increasingly positioned as neutral, non-aligned global hubs, supporting investment inflows and growth opportunities. • Increased outsourcing of mission-critical services, as customers prioritise reliability, safety and predictable operating costs, provides opportunities for sustainable growth. Our Response • Continuing to broaden sectoral and geographic exposure to growth markets in Southeast Asia and the Middle East. • Accelerating the adoption of mechanisation, automation and process standardisation to drive operational efficiencies and cost competitiveness. • Differentiating ourselves within the facilities management segment through modern, sustainable solutions, thus enhancing our resilience during challenging economic periods. • Maintaining a strong focus on our stable concessions-based business, which provides steady cash flows. Outlook Near-term macroeconomic conditions are expected to remain cautious, with the IMF projecting global GDP growth of 3.3% in 2026. While inflation is expected to remain broadly contained, global trade conditions remain subject to downside risks arising from policy uncertainty and trade fragmentation. Against this backdrop, a slowdown in large-scale project activity or scope rationalisation may persist. To mitigate these risks, the Group continues to diversify its business across higher-growth geographies, including the Middle East, while strengthening differentiation through technology-enabled and sustainability-led solutions. LINK TO Capitals Material Matters M2 M3 Stakeholders S2 S3 Risks R1 R3 KEY MARKET TRENDS OPERATING ENVIRONMENT AND KEY MARKET TRENDS
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