PETALING JAYA: Uncertainty over US trade policy remains the most pressing risk to Malaysia’s export outlook, analysts say.
While Malaysia secured a negotiated tariff rate of 19% with the United States, analysts said an external trade slowdown appears both imminent and unavoidable.
“Domestic exports are likely to stay muted, expanding by just 1.2%, while frontloading activity will continue to support the re-exports segment. For this year, we maintain our forecast for gross exports to grow by 2.9%,” BIMB Research said.
In August, Malaysia’s year-on-year (y-o-y) exports growth moderated to 1.9%, while imports contracted 5.9%.
Notably, exports to the United States contracted, which was the first since December 2023. On the flip side, shipments to China saw the highest growth since September 2022.
Exports to China accounted for 13.1% of total exports in August, higher than the United States’ 12.4%.
For the first eight months of this year, the country’s total trade expanded by 3.8% y-o-y to RM1.98 trillion.
According to BIMB Research, export data for the past two months highlight a shift in Malaysia’s key markets, reflecting broader changes in global trade conditions and the ongoing volatility caused by prolonged tariff uncertainty.
“At the same time, imports of intermediate goods continued to contract at a double-digit pace for the sixth consecutive month for July to August, reaffirming our view that Malaysia’s trade outlook will remain cloudy through the rest of this year and into next year,” the research house.
It added that as long as the Trump administration’s tariff and foreign trade policies remain unresolved, external demand and business sentiment are likely to stay subdued.
Meanwhile, CGS International Research (CGSI Research) believes market rerouting could help support export growth this year, despite ongoing global trade uncertainty.
The research house noted that the proportion of Malaysia’s exports to Mexico to have been steadily expanding since April.
“We think electrical and electronics (E&E) industry players are preparing for future US tariffs on E&E goods to buffer any further dent in their business costs.
“Shipment of manufactured goods also saw positive growth of 5.3% y-o-y in the year to August.
“This is also consistent with the manufacturing sector’s improved growth in the first eight months of this year, which mainly comes from export-focused sectors such as E&E, machinery, and transport equipment,” the research house said in a report.
Citing August global semiconductor sales, which expand at 20.9% y-o-y, CGSI Research expects growth to continue for September as well.
In addition, the steady growth in Malaysia’s capital goods imports for the month may also indicate strength in the local manufacturing, said CGSI Research.
“Nonetheless, we acknowledge the potential risk of trade disruptions due to the recent geopolitical tensions between Israel and Qatar. The disruption of Middle Eastern energy supplies could drive crude oil prices upwards, damping global demand.”
Brent crude oil prices averaged US$68.2 per barrel in August, down 15.7% y-o-y and 3.9% month-on-month.
