The surge in exports was driven by strong demand for manufactured goods, particularly electrical and electronic products.
PETALING JAYA: Economists remain cautiously optimistic about Malaysia’s trade performance in the near term, despite escalating geopolitical tensions and weaker demand in key markets.
Trade continued its upward momentum in February 2025, reaching a record RM223.89bil, a 5.9% year-on-year (y-o-y) increase. Exports rose 6.2% to RM118.26bil, while imports climbed 5.5% to RM105.64bil, leading to a trade surplus of RM12.62bil, extending a 58-month streak since May 2020.
The surge in exports was driven by strong demand for manufactured goods, particularly electrical and electronic (E&E) products, which increased by over RM7bil.
Agriculture exports, notably palm oil and related products, also contributed to the growth.
Key export markets, including Asean, the United States, the European Union (EU) and Taiwan, recorded higher demand for E&E products, aligning with the projected 11.2% growth in global semiconductor sales for 2025.
Free trade agreement (FTA) markets like Mexico and Canada also saw increased exports, driven by continued demand for E&E products.
For the first two months of 2025, Malaysia’s total trade expanded by 4.4% y-o-y to RM465.86bil. Exports grew 3.1% to RM241.07bil, while imports increased 5.9% to RM224.79bil, resulting in a trade surplus of RM16.28bil.
AmBank Group chief economist Firdaos Rosli warned that the improvement in trade performance might be temporary as external demand adjusts to new global economic conditions.
“The deceleration in imports since September 2024 could indicate cautious business sentiment, leading to weaker new orders.
“While a slowdown in imports improves the trade balance in the short term, it may signal softer industrial production but could rebound as new orders pick up,” he told StarBiz.
Firdaos noted that improving export orders in the coming months could support Malaysia’s manufacturing sector.
Bank Muamalat chief economist Mohd Afzanizam Abdul Rashid also highlighted ongoing challenges for Malaysia’s trade performance due to global trade tensions.
“We have yet to see the full impact of the tariff measures enacted by the US government towards Canada, Mexico and China. It is likely that US demand could slow in the months to come as tariffs essentially work as a tax, sapping purchasing power among Americans,” he said.
However, Mohd Afzanizam pointed out that China’s efforts to boost domestic consumption could help offset the decline in US demand.
“China’s government is determined to boost its consumption. This would result in demand picking up in the foreseeable future, offsetting any weaknesses from the United States.
“China accounted for 12.4% of Malaysia’s total exports in 2024 and recorded two consecutive years of contraction, with total exports falling by 8.9% and 2.2% in 2023 and 2024, respectively,” he said.
Mohd Afzanizam added that China’s accommodative monetary policy and expansionary fiscal stance could further support its economic growth and increase import demand.
“All in all, the prospect for international trade this year remains challenging given the ongoing trade war. It remains to be seen whether the scope of the trade war will expand after the US government completes its studies, potentially imposing reciprocal tariffs on other countries, including Malaysia, in April,” he said.
