CIMB Research forecasts export growth of 5.3% for 2025.
PETALING JAYA: The country’s external trade is set to maintain steady growth in 2025, underpinned by resilient demand for manufactured goods and electrical and electronics (E&E) products.
However, analysts warn of headwinds from geopolitical uncertainties, including potential US trade protectionism and slower growth in China.
Recent data from the Statistics Department revealed that exports grew by 4.1% year-on-year (y-o-y) in November 2024, accelerating from October’s 1.6% increase and surpassing market expectations of 1.9%.
The robust performance was driven by manufactured and agricultural goods, particularly E&E products, palm oil-based agriculture products, and machinery.
Imports growth slowed to 1.6% y-o-y in November, down from October’s 2.7%, while the trade balance widened to RM15.3bil, the largest in 14 months.
CIMB Research emphasised that Malaysia’s manufacturing trade demonstrated resilience despite challenges in the mining sector.
“The pick-up in export growth in November signals continued strength in manufacturing trade for the fourth quarter of 2024,” the brokerage noted, adding that the ongoing global semiconductor recovery is expected to sustain export momentum into 2025, with E&E exports accelerating further.
CIMB Research forecast export growth of 5.3% for 2025, up from the projected growth of 5% for 2024, with import growth expected to slow to 5.6% next year from the estimated 12.8%.
This would be in tandem with its projected gross domestic product (GDP) growth of 5% for 2025 and 5.2% for 2024.
“Malaysia’s external trade outlook remains supported by the ongoing recovery in global demand amid the tech upcycle and easing monetary policies in the second half of 2024, despite potential tariff headwinds from US protectionist policies,” CIMB Research stated.
Maybank Investment Bank (Maybank IB) Research, however, highlighted concerns over the impact of potential changes to US trade policies under a second Trump presidency. “The outlook for 2025 is clouded by uncertainties over Trump 2.0’s trade and tariff policies,” it said, predicting slower export and import growth of 4.5% and 6.3%, respectively.
Maybank IB Research also anticipated a narrower trade surplus of RM112bil for 2025, compared to RM129bil in 2024.
Hong Leong Investment Bank (HLIB) Research struck a cautiously optimistic tone, pointing to Malaysia’s diversified exports as a buffer against geopolitical risks.
“Malaysia’s export performance is expected to remain expansionary, given its neutral stance and diversified exports structure, front-loading orders ahead of a potential trade war, and continuous global demand for E&E products,” it said. The brokerage maintained its GDP growth forecast of 5% for 2024 and 4.9% for 2025.
Similarly, UOB Kay Hian (UOBKH) Research projected export growth of 4.5% for 2025, down from a revised 5.1% estimate for 2024.
It cited three major concerns – the potential impact of tariffs under Trump’s second presidency, particularly if blanket tariffs are implemented on all imports into the United States; a challenging growth prospect for China; and lingering geopolitical tensions.
Despite these challenges, analysts agree that Malaysia’s strategic position, robust trade infrastructure, and proactive policies will help it navigate a shifting global trade environment. CIMB Research noted that the country’s ongoing adoption of the China Plus One strategy and front-loading activities ahead of potential trade barriers would bolster its trade prospects.
It said: “Although lingering trade and political uncertainties pose downside risks, Malaysia’s strategic location, advanced trade infrastructure, and proactive policy measures position it well to capitalise on opportunities in the shifting global trade environment.”
The Finance Ministry has forecast export growth of 5.6% for 2024, though analysts expect a moderate slowdown in 2025. “Heading into 2025, we remain cautiously optimistic about the external trade outlook,” said UOBKH Research, highlighting that global demand for Malaysian goods remains a crucial driver.
