KUALA LUMPUR (June 20): Malaysia’s export growth is projected to moderate to 2% in 2025, from 5.7% in 2024, amid ongoing trade uncertainties and rising geopolitical tensions in the Middle East, according to MIDF Amanah Investment Bank.
In a note on Friday, the research house said the prospect of higher tariffs and potentially weaker demand from key trade partners continues to pose downside risks to the country’s trade outlook. It also expects import growth to ease to 4.5% from 13.2% last year.
“In the near term, the boost to exports from front-loading activities during the 90-day tariff pause may be less pronounced than expected. Although trade tensions between the US and China have eased, the overall trade landscape remains uncertain, with escalating tensions in the Middle East adding another layer of risk. Likewise, the outcome of Malaysia’s trade negotiations with the US is still unclear,” MIDF said.
However, it noted that if Malaysia manages to secure tariffs below 10% for strategic sectors — particularly the electrical and electronics industry — this could provide some relief against external headwinds.
“Meanwhile, we expect sustained import growth from front-loading activities to temporarily narrow the trade balance. On a positive note, the expansion of bilateral trade and diversification away from reliance on the US market may help cushion the impact of tariffs.
“As uncertainties surrounding external trade developments persist, we continue to expect resilient domestic consumption will remain the key pillar supporting Malaysia’s economic growth,” MIDF added.
Malaysia’s exports fell in May — the first contraction this year — dragged by a sharp decline in petroleum product shipments and lower deliveries to China and Japan. Exports slipped 1.1% year-on-year and 5.2% month-on-month to RM126.62 billion, according to data from the Ministry of Investment, Trade and Industry.
Despite the weaker May figures, Kenanga Investment Bank expects the decline to be temporary, projecting a likely rebound in June. However, it cautioned that growth will remain volatile in the near term, especially ahead of the July deadline for reciprocal tariffs, the research house said in a separate note.
“While a positive outcome with the US is possible, higher tariffs are expected to remain and may weigh on export demand from 2H2025 onwards. Therefore, we remain cautious due to the delayed impact of Trump’s tariffs and its policy unpredictability,” Kenanga added.