The Statistics Department reported that the trade surplus rose significantly by 58.9% y-o-y from RM12bil to RM19bil last month.
PETALING JAYA: Economists are keeping a hopeful stance that Malaysia’s trade performance will continue to do well in the near term, despite acknowledging the external macro conditions could still threaten its expansion over the next 12 months.
The country’s trade strengthened in October 2025, with total trade increasing 13.6% year-on-year (y-o-y) to RM277.6bil from RM244.5bil, representing the largest trade value ever recorded in Malaysia’s history.
According to the Statistics Department, the performance was driven by an export growth of 15.7% and an import growth of 11.2%, which surged to RM148.3bil and RM129.3bil, respectively, also representing the highest export and import on record.
In tandem, the Statistics Department reported that the trade surplus rose significantly by 58.9% y-o-y from RM12bil to RM19bil last month.
Chief Asia economist and co-head of Global Investment Research Asia at HSBC, Frederic Neumann, believes that Malaysia is defying signs of a slowdown elsewhere in the region, which in part reflected the strong global demand for electronics and semiconductors, which the country specialises in.
However, he cautioned that export growth could still slow in the coming months in line with a broader pullback in global trade after the tariff front-loading effect fades, and demand in the United States cools.
“Cooling import growth of intermediate goods already points to a slowing in manufacturing activity.
“On the other hand, given ongoing capacity expansion in Malaysia, and the country’s competitiveness in the broader semiconductor supply chain, Malaysia shipments should continue to gain market share over the coming year, helping to support growth more broadly,” he told StarBiz.
Potential softening in commodity prices would still constitute a risk, said Neumann, though the impact on Malaysia’s economy will likely be manageable as long as the country continues to expand its footprint in key manufacturing supply chains, such as semiconductors and electronics more broadly.
Concurrently, economist and associate professor at Universiti Kuala Lumpur Business School Mohd Harridon Mohamed Suffian is expecting the strong trade showing to continue in the near future, with the momentum likely to persist until year-end.
Having said that, he opined that it remains sensible to monitor macro forces to identify any encumbrances that would deflate Malaysia’s trade values.
Echoing Neumann’s point, he said, “Historically, it can be observed that favourable trade volumes begin to diminish due to unexpected low demand from consumers and foreign countries, and geopolitical factors had also contributed to the dismal performances of exports.”
Meanwhile, Malaysia’s chief statistician Datuk Seri Mohd Uzir Mahidin reported that compared with September 2025, exports, imports and total trade recorded an increase of 6.7%, 8.9% and 7.7%, respectively, although trade surplus was lower by 6.1% from RM20bil to RM19bil.
Commenting further on exports, he said the increase was primarily driven by higher shipments of electrical and electronic (E&E) products; palm oil and palm-based agriculture products; optical and scientific equipment; as well as manufacture of metal.
Mohd Uzir also attributed the upswing in imports to higher demand for capital goods and consumption goods, adding that import of capital goods rose 51.9% y-o-y or RM6.4bil to reach RM18.7bil.
Capital goods are defined as goods that are used in producing other goods, rather than being bought by consumers.
In contrast, he pointed out that imports of intermediate goods, which made up 45.8% of total imports, contracted by 5.7% or RM3.6bil, settling at RM59.2bil.
Mohd Harridon recognised that the slide in intermediate goods import could signify the deflation of manufacturing exports, and it is crucial to rectify the situation in order for Malaysia’s manufactured goods to remain competitive and resilient to market demands.
From an alternate perspective, he observed that the reason for the reduced import of intermediate goods could be due to the excessive storage of raw materials by manufacturers.
He suggested that data of intermediate goods imports should be read in tandem with the Industrial Production Index in order to gain a more holistic picture of the economic landscape.
Economist Doris Liew concurred with Mohd Harridon that Malaysia’s export momentum is likely to continue, stating that the rapid global development and adoption of artificial intelligence (AI) is sustaining demand for Malaysia’s E&E and semiconductor-related products.
“The structural tailwinds are intact and will remain supportive in the near term. While exports to the United States dipped slightly, shipments to Singapore, China, the European Union and Mexico surged this quarter.
“Mexico stands out in particular, a 142% y-o-y increase, reinforcing the narrative that some semiconductor trade is being re-routed through Mexico to navigate tariff exposure.
“In practice, this means Malaysia’s effective trade with the United States has not softened as much as headline data suggests,” she said.
In addition, she said the recent US-Malaysia negotiations, culminating in the legally binding reciprocal trade agreement signed at the Asean Summit in late October, also injected fresh certainty into the trade environment.
Locking in tariff rates eliminates a major source of volatility for exporters, said Liew, and the agreement signals deeper strategic and economic alignment between Washington and Kuala Lumpur.
“Such clarity typically unlocks investment, stabilises supply-chain planning and strengthens business confidence,” she noted.
In a statement, the Investment, Trade and Industry Ministry or Miti as well as the Malaysia External Trade Development Corp or Matrade said they would continue to support Malaysian exporters amid external pressures.
“(We) encourage businesses to pursue market diversification, strengthen supply chain resilience, monitor global trade shifts and leverage Malaysia’s 18 free trade agreements to expand globally.
“The Malaysia-United Arab Emirates (UAE) Comprehensive Economic Partnership Agreement or CEPA, which came into force on Oct 1, 2025, is also set to help Malaysian exporters leverage the UAE as a strategic gateway into West Asia and beyond.”
