UOB senior economist Julia Goh projects an export growth of 12.5% for November, driven by gains across key segments.
PETALING JAYA: Malaysia’s trade performance is expected to have sustained its robust momentum in November, supported by electrical and electronics (E&E) exports and lingering pre-tariff front-loading effects, economists say ahead of the release of official November trade data this Friday.
Malaysia’s total exports for the first 10 months of the year rose by an average of 6%, compared to 5.1% during the same period last year. Exports had exceeded expectations in October, having surged by 15.7% year-on-year (y-o-y) to a record RM148.3bil, marking the fourth consecutive month of gains.
October’s trade gains were fuelled by front-loading of US-bound shipments before tariff deadlines, higher exports to the European Union, China, Singapore and Hong Kong, and stronger manufacturing, particularly in E&E products.
iFAST Capital research analyst Kevin Khaw Khai Sheng said while the front-loading phase is “almost at an end”, it is “still likely to be reflected in November’s trade figures”.
“November’s trade performance is expected to sustain the robust momentum seen in October. Front-loading activities will more or less fade in the first quarter of 2026 (1Q26), and may likely lead to a softer start in terms of trade growth next year,” he told StarBiz.
Nonetheless, Khaw said while the country’s export volumes may slow due to the high base effect from front-loading activities, export value “should hold up a little bit”.
“The focus next year will be more on services exports, particularly with the government’s Visit Malaysia 2026 initiative.
“The resulting influx of tourism receipts should help ensure the country’s balance of payments remains healthy, and partly offsets the softer dip stemming from the fading of front-loading activities,” Khaw said.
“Secondly, with the government’s efforts to shore up manufacturing activities, particularly on higher-end chips, we expect technology-driven manufacturing exports to sustain in 2026. These are the two key catalysts that should help offset the dwindling front-loading impact seen in 2025,” he said.
Meanwhile, UOB senior economist Julia Goh projects an export growth of 12.5% for November, driven by gains across key segments.
“Additionally, improvements in the October export-oriented production and November new orders index point to sustained export activity,” she said.
Looking ahead, Goh maintains a positive outlook for Malaysia’s trade, underpinned by the reciprocal tariff agreement and the one-year US-China trade truce.
“Structural changes from global tariff adjustments, the ongoing artificial intelligence (AI)-driven cycle, and deeper regional integration are expected to support trade momentum into 2026, though at a more moderate pace,” she said, adding the ringgit is expected to appreciate at a more gradual pace next year.
“Continued currency strength could also encourage quicker conversion of export proceeds, enhancing ringgit liquidity in the market,” Goh said.
Going forward, Khaw noted the uncertainty surrounding sector-specific tariffs in the semiconductor sector, along with the pace of China’s economic recovery, are the main wildcards shaping Malaysia’s trade performance next year.
This year, as part of the United States’ tariff regime, Washington launched a review into the semiconductor industry under Section 232 – a national‑security investigation that can lead to duties on imports deemed critical to national security – raising the possibility of sector‑specific tariffs for the sector.
Malaysia’s semiconductor exports to the United States currently enjoy zero tariffs under existing arrangements, but the outcome of the ongoing review could change that, leaving future duties and their potential impact on trade flows uncertain.
With regards to China, Khaw said the country has not yet fully recovered “to its previous peak,” and that an unexpected growth recovery in China next year could act as a positive catalyst for Malaysia’s trade prospects.
As it is, China’s latest economic data point to a continued loss of momentum as the year comes to a close. Industrial production increased 4.8% in November compared with the same month last year, slightly down from October’s 4.9% and below economists’ forecast of 5%, marking the slowest growth in roughly 15 months.
Meanwhile, its consumer spending showed even greater weakness, with retail sales rising only 1.3%, a sharp decline from October’s 2.9% and well under expectations, representing the slowest growth since China ended its zero-Covid restrictions in late 2022.
Despite this, Khaw said a recovery for the Chinese economy is still “quite possible”, pointing out that China’s purchasing managers’ index (PMI) is hovering between 49 and 51 points.
“A PMI of 49 points is not so good, but it is near the 50-point level.
“China faces structural challenges, particularly the property sector slump, which isn’t expected to recover next year.
“However, consumer sentiment – from Golden Week spending and next year’s Lunar New Year – could act as a catalyst to support economic expansion,” he said.
Separately, Universiti Tunku Abdul Rahman economics professor Wong Chin Yoong said if the AI investment bonanza does not come to a coyote moment, and if trade diversification is intensified further, local trade performance in 2026 shall be “a bright one”.
