KUALA LUMPUR (March 28): Malaysia’s external balance will likely face increasing headwinds in the coming quarters due to slower export growth, the Australia & New Zealand Banking Group (ANZ) warned on Friday.

The ringgit could come under pressure if the US imposes higher-than-expected tariffs on Malaysian exports at a time when foreigners have been recently selling Malaysian equities due to global growth concerns, the bank said in its Asia Economic Outlook report.

“Though domestic growth will hold up well, trade uncertainty and slowing global growth are becoming less supportive of the ringgit,” ANZ said.

Malaysia runs trade and current-account surplus that help to shield the country’s currency from sharp depreciation. The surplus in external balance indicates that Malaysia produces and sells more of its goods than it buys from overseas, keeping up demand for the country’s currency.

The ringgit has remained largely steady since the start of 2025 following strong appreciation against the US dollar last year. The FBM KLCI meanwhile is still down about 6% from the end of 2024 amid persistent foreign selling, in line with outflows across most major markets in Southeast Asia.

ANZ is forecasting the ringgit to depreciate gradually to 4.60 against the US dollar by the year-end.  

Malaysia’s current-account surplus will remain steady at 1.7% of gross domestic product, according to ANZ’s forecast. However, the overall balance of payment surplus, as a percentage of economic output, could narrow to 0.5% this year from 0.8% last year.

Lower foreign investment approvals in 2024 point towards a decline in foreign direct investment inflows this year while elevated volatility in global financial markets suggest a more moderate surplus on the financial account, the bank added.

The government is banking on domestic demand from resilient household spending and business investments to help cushion potential external drag at a time when the US has threatened sweeping tariffs on its trading partners.

Bank Negara Malaysia recently maintained its forecast for the economy to expand steadily between 4.5% and 5.5% for 2025 even as external headwinds intensify with the international trade tensions.