PETALING JAYA: Malaysia’s trade is poised to hit another record in 2026, although growth pace is expected to moderate as the full impact of the United States’ reciprocal tariffs and currency volatility weigh on external demand, economists say.
Malaysia’s external trade totalled RM3.06 trillion in 2025, passing the three-trillion-ringgit-mark for the first time and expanding 6.3% year-on-year from RM2.88 trillion in 2024.
Exports grew 6.5% year-on-year to a record RM1.61 trillion, while imports increased by 6.2% to a record RM1.46 trillion.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the bank remains conservative in its outlook for 2026 due to the full impact of US import tariffs.
He expects exports to grow between 4.5% and 5% in 2026, slower than the 6.5% recorded last year, while imports growth could moderate to 5.2% from 6.2% in 2025.
Still, total trade will continue to be in excess of RM3 trillion, he said.
“In terms of absolute value, yes,” he told StarBiz when asked whether trade could surpass 2025’s record.
“Our estimates for total trade for 2026 is about RM3.2 trillion.”
Economist Geoffrey Williams said trade performance in 2025 was better-than-expected, with shipments to the United States rising significantly despite reciprocal tariffs.
In 2025, trade with the US expanded 13% to RM367.47bil, accounting for 12% of Malaysia’s total trade, with exports hitting a new high of RM233.08bil and imports rising 6.4% to RM134.39bil.
The United States was Malaysia’s third-largest trading partner, after China with total trade of RM541.9bil and Singapore with RM402.38bil.
Overall, Williams said net trade, an important indicator, has struggled in recent years but recovered last year, with Malaysia recording a trade surplus of RM151.8bil, up 9.2% compared with 2024 – maintaining consecutive surpluses since 1998.
However, Williams warned that risks remain, heading into 2026.
“The very strong ringgit is bad for exporters and makes imports cheaper,” he said.
“This is the big risk for 2026. If the ringgit remains too strong, it will hold back exporters and help imports. This will squeeze net trade.”
At press time, the ringgit was trading at about 3.8995 against the greenback, its strongest level in eight years.
Williams said another risk would be a sharp correction in the ringgit towards RM4.20 to RM4.40 against the greenback.
Despite external uncertainties, Williams said the more pressing risk lies at home.
“The biggest risk is domestic political instability which has been fomenting recently. This will harm confidence and trade and may impact the exchange rate,” he said.
On this front, CIMB Research said, last week, FBM KLCI rose 0.4% week-on-week, adding seven points to 1,739 points, supported by stronger-than-expected fourth-quarter 2025 gross domestic product growth of 6.3% and the strong ringgit.
“However, sentiment was partly weighed down by a Bloomberg report alleging that private interests influenced investigations by the Malaysian Anti-Corruption Commission, which its chief denied,” it noted.
Yesterday, the FBM KLCI closed 1.72 points or 0.10% higher at 1741.26 points.
On January 2026’s trade performance, due to be released on Friday, Mohd Afzanizam expects trade to remain resilient, projecting exports and imports to expand 18.1% and 13.3% year-on-year, respectively.
He said this was partly due to the low base at the start of last year.
“Our key products such as semiconductor and crude palm oil exports are expected to drive Malaysia’s exports in January,” he said.
Judging from the global purchasing managers’ index (PMI), which rose to 50.9 points in January, Mohd Afzanizam said global sentiment among manufacturers is improving.
“Similarly for Malaysia’s PMI which sustained above 50 points for three consecutive months. In that sense, Malaysia’s trade is expected to stay resilient in January,” he said.
Mohd Afzanizam added that crude palm oil exports grew by 25.8% in January 2026 to 1.48 million tonnes.
“So, we shall see good numbers for trade in Malaysia.”
Trade momentum strengthened towards the end of last year, with December 2025 recording the highest monthly trade, export, and import values to date, while the fourth quarter also posted the strongest quarterly performance on record.
Total trade in December 2025 rose 11.1% year-on-year, increasing by RM28.7bil to RM286.63bil from RM257.9bil a year earlier.
Imports increased by 12% or RM14.3bil to RM133.7bil, while exports rose 10.4% or RM14.3bil to RM153bil, resulting in a trade surplus of RM19.3bil.
In December 2025, exports of manufactured goods, which accounted for 87% of total exports, registered double-digit growth of 13.6% year-on-year to RM133.09bil, the highest value recorded to date.
The performance was supported by higher exports of electrical and electronic products, optical and scientific equipment, machinery, equipment and parts, as well as iron and steel products.
Meanwhile, exports of agriculture goods declined 7.4% to RM9.81bil due to lower palm oil export prices, while exports of mining goods contracted 15.2% to RM8.5bil following lower liquefied natural gas and crude petroleum export volumes and prices.
