Malaysia: Robust exports to support trade outlook

Malaysia's trade prospects for 2025 remain supported by robust exports, after bouncing back to growth in July with the highest monthly value ever, economists said.

But they warn that the outlook for next year will likely be riddled with headwinds as the full impact of the 19 per cent tariff imposed by the US sets in.

Malaysia's trade hit a record high of RM265.92 billion in July, up 3.8 per cent from RM234.85 billion a year earlier, supported by stronger exports that reached their highest level in nearly three years.

Investment, Trade and Industry Ministry said exports rose 6.8 per cent to RM140.45 billion, the strongest monthly performance since September 2022, reflecting sustained global demand for Malaysian goods.

"Imports edged up by 0.6 per cent to RM125.47 billion, while trade surplus continued for the 63rd consecutive month, valued at RM14.98 billion for July 2025," it said in a statement.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said exports to the United States have been "commendable", growing more than 20 per cent in the first seven months of this year.

This goes to show that front-loading activities among the US importers have been growing at a healthy clip and such trends are quite similar to the regional economies, he added.

"In some sense, this should alleviate concern on the overall growth performance for 2025. Therefore, 2026 would be much more critical as the impact of the full 19 per cent tariff rate will be felt more visibly," he told Business Times.

Meanwhile, economist Dr Geoffrey Williams said while the export and total trade figures are part of a continuing improvement in overall trade, the net trade figures are the indicator to watch.

He noted that the current account surplus sank to just RM0.3 billion, or 0.1 per cent of gross domestic product (GDP), in the second quarter of 2025.

In June 2025, Malaysia had a trade surplus of RM8.6 billion which was an increase from the RM0.8 billion surplus in May.

"So the July figure is more positive, which is almost double the month before. Nonetheless the trade surplus is very volatile and has been on a general downwards trend since August 2023," he said.

Williams expects continued global headwinds which will affect net trade volatility in the coming months and will reduce the contribution of net trade to GDP growth.

"Already (Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said this week that the US tariff issue will cut 0.6-1.2 per cent off GDP, so on average this is a loss of RM20 billion," he said.

Elaborating on the trade performance, the ministry said exports of electrical and electronic (E&E) products jumped by nearly RM12 billion to RM63.31 billion, a 22.5 per cent year-on-year increase.

For the January-July 2025 period, total trade rose 4.7 per cent year-on-year to RM1.731 trillion, with exports expanding 4.3 per cent to RM900.47 billion and imports increasing 5.1 per cent to RM830.16 billion.

This resulted in a trade surplus of RM70.32 billion, the highest cumulative value to date.

The ministry said Malaysia's trade performance in the first seven months of 2025 reflected a cautiously improving global trade outlook.

The US decision to cut reciprocal tariffs on Malaysian exports to 19 per cent from 25 per cent underscored the country's disciplined trade diplomacy, it added.

"This tariff rate, which is roughly in line with the rest of our peers in Asean, will continue to support our competitiveness.

"Despite global trade and US tariff headwinds, Malaysia's steady trade performance has contributed to the expansion of the nation's gross domestic product by 4.4 per cent in the second quarter of 2025."

Source: New Sraits Times