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KUALA LUMPUR: Malaysia's external trade continues to expand, albeit at a slower pace, year-on-year (YoY) in January to kick off 2025 with a 13th consecutive month of growth.
Economists said the trade sector demonstrated resilience amid global economic uncertainties and the potential impact of US trade protectionism.
According to the Malaysia External Trade Development Corporation (Matrade), the country's trade grew 3.1 per cent YoY to RM241.95 billion, marking the highest value ever recorded for January.
Exports saw a modest 0.3 per cent growth to RM122.79 billion, while imports surged by 6.2 per cent to RM119.16 billion. This resulted in a trade surplus of RM3.63 billion, marking the 57th consecutive month of surplus since May 2020.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Malaysia's export outlook remains positive, particularly for semiconductors, commodities such as palm oil and liquefied natural gas as well as machinery and chemical products.
However, Afzanizam cautioned that potential tariff hikes under the US administration could disrupt this trajectory.
"There could be a knee-jerk reaction from US customers facing the threat of higher tariffs, possibly accelerating overseas purchases before tariffs are implemented. This might provide a short-term boost, but in the medium to long term, demand could decline as US buyers seek cheaper alternatives," he told the Business Times.
Given that the US remains Malaysia's top trading partner, any slowdown in demand could directly impact exports.
Afzanizam expects Malaysia's export growth to moderate to around 4.5-5.0 per cent as the effects of possible tariff hikes take hold.
MIDF Research said by destination, exports to Singapore and the US - Malaysia's top two export markets in January wirth a combined 31 per cent share of the total exports), grew robustly albeit softening to 19.7 per cent YoY (December 2024: 44.3 per cent YoY) and 28.1 per cent YoY (December 2024: 29.4 per cent YoY), respectively.
Export growth to these two markets was driven by rising demand for E&E products, driven by the ongoing growth cycle, it added.
MIDF Research expects the country's external trade to continue growing this year, with exports and imports expected to grow at 4.9 per cent and 4.5 per cent respectively.
"We anticipate rising demand for electrical and electronic (E&E) products and palm oil to support export growth in the coming months. Meanwhile imports are expected to expand further, supported by strong domestic demand and increased business activity.
"However, we remain cautious about potential risks to Malaysia's external trade outlook, including uncertainties surrounding the US tariff policies, resurgence of inflation, escalating geopolitical conflicts and weaker demand from key trading partners," it said.
Meanwhile, Matrade noted that the export performance in January 2025 was driven by robust growth in key sectors, particularly manufacturing and agriculture.
This year commenced with an impressive monthly performance in E&E exports, which saw an increase of almost RM7 billion.
Other products that recorded export growth include palm oil and palm oil-based agricultural products as well as machinery, equipment and parts.
In terms of markets, exports to the US and Taiwan posted significant double-digit growth in January 2025, fuelled by rising demand for E&E products, notably semiconductor devices and integrated circuits.
Meanwhile, Matrade said Malaysia's trade with Free Trade Agreement (FTA) partners, which contributed 63.2 per cent to the country's total trade, weakened by 2.6 per cent YoY to RM152.89 billion.
Exports to FTA partners shrank 3.3 per cent to RM81.32 billion, while imports edged down by 1.8 per cent to RM71.57 billion.
Despite lower overall exports to FTA partners, increases in exports were recorded to Hong Kong, which were higher by 12.3 per cent to RM7.38 billion, and Canada, which surged by 102.6 per cent to RM684.5 million, buoyed by higher exports of E&E products.
Additionally, exports to Türkiye expanded 5.9 per cent YoY to RM1.95 billion, backed by rising exports of palm oil and palm oil-based agriculture products.
Exports to Peru grew 27.5 per cent to RM113 million and exports to Chile soared by 93.4 per cent to RM100.3 million, led by strong exports of chemicals and chemical products.
On a month-to-month basis, trade, exports and imports were lower by 8.6 per cent, 13.3 per cent and 2.5 per cent respectively.
Matrade said Malaysia's gross domestic product (GDP) growth in 2024 remained robust, expanding significantly by 5.1 per cent compared to the 3.6 per cent expansion recorded in 2023.
"Bank Negara Malaysia attributed the 2024 GDP growth to, among others, a 12.3 per cent increase in private investments and an 8.5 per cent increase in exports.
"Building this strong performance, the Ministry of Investment, Trade and Industry and Matrade are dedicated to accelerating export growth by strengthening ties with key trade partners, tapping into new markets and providing Malaysian exporters with the support needed for their resilience and sustainable long-term success," it said.
Source: https://www.nst.com.my/business/economy/2025/02/1178122/malaysias-trade-outlook-remains-strong-amid-global-uncertainty%C2%A0us