53 ENRA GROUP BERHAD ANNUAL REPORT 2025 • ENSURING BUSINESS CONTINUITY I. Overview and outlook of the Malaysian Economy The Malaysian economy expanded by 4.4% in the first quarter of 2025 (4Q 2024: 4.9%), driven by the steady expansion in domestic demand. Household spending was sustained amid positive labour market conditions and income-related policy measures, including the upward revision of minimum wage and civil servant salary. The steady expansion in investment activities was supported by realisation of new and existing projects. Overall growth was also weighed down by a contraction in the mining sector amid lower oil and gas production. On a quarter-on-quarter, seasonally-adjusted basis, growth expanded by 0.7% (4Q 2024: -0.2%). Ringgit remained broadly stable against currencies of major trade partners in the first quarter of 2025. In the first quarter of 2025, the ringgit remained broadly stable. The nominal effective exchange rate (NEER) against the currencies of Malaysia’s major trade partners increased marginally by 0.01%. The ringgit also appreciated by 0.8% against the US dollar. This movement was primarily driven by the weakening of the US dollar as growing uncertainties over US trade policy resulted in increased expectations of more subdued US economic growth. External factors are expected to continue influencing the ringgit exchange rate. Notwithstanding, Malaysia’s positive macroeconomic prospects supported by the ongoing implementation of structural reforms will provide medium-term support for the ringgit. BNM remains committed to ensuring the orderly functioning of the domestic foreign exchange market The inflation outlook remains contingent on evolving global conditions and domestic policy measures. In 2025, headline inflation is projected to remain within a moderate range of 2.0 - 3.5%, driven by further moderating global costs and absence of excessive demand. Similar to the economic outlook, any changes to the forecast will be released once there is greater visibility on the external developments. Global commodity prices are expected to be lower, contributing to further downward pressure. (Source: Economic and Financial Developments in Malaysia in the First Quarter of 2025, Bank Negara Malaysia) II. Overview and outlook of the UK Economy The UK economy is forecast to grow by 1.2% in 2025, slightly improving from 1.1% in 2024, with a similar pace of 1.1% in 2026. This reflects a modest acceleration supported by policy and economic stabilisation. Both fiscal and monetary policies are expected to play a supportive role in 2025. The Bank of England is projected to gradually lower interest rates, aiming for 3.25% by end-2026, despite recent inflationary spikes. While the direct impact of the new UK-US trade deal is expected to be limited, it may help reduce some trade-related uncertainty. The deal includes tariff reductions in sectors such as automotive, steel, and aluminium. The UK may avoid the direct effects of escalating US tariffs due to its existing bilateral deal, but could still face indirect impacts from global supply chain disruptions and general economic downturns. Declining interest rates and rising real wages are expected to support household incomes, potentially translating into stronger consumer spending, although part of the income gains may still go into savings. (Source: Spring 2025, European Economic Outlook, KPMG UK) III. Overview and of the Group Operational Division a. Energy Logistics The division’s principal asset, the chemical tanker, Hexagon Alpha, successfully completed its mandatory dry docking and special survey in July 2024. Since then, the vessel has undertaken several chartering contracts, primarily operating across Asia and Europe. These initial activities offered valuable operational insights but also highlighted key challenges inherent to the time chartering market, including route volatility, idle periods and margin pressure. In response, the Division initiated a strategic reassessment to evaluate the long term viability of Hexagon Alpha within the time chartering segment. A significant development followed in June 2025, when Hexagon Alpha secured a 12 months FSO contract. This Marks a shift towards a more stable and utilitarian deployment model, enabling predictable revenue while reducing exposure to the uncertainties of the spot charter market. Sustainability Report (Cont’d)
RkJQdWJsaXNoZXIy