Economists have turned more upbeat on Malaysia’s trade trajectory, raising their export forecasts for 2025 after October’s sharper-than-expected export surge signalled firmer external demand heading into year-end.
Kenanga Research, MBSB Research, UOB Global Economics & Markets Research, and CIMB Treasury and Markets Research revised their 2025 export growth projections to 6%, compared with 5.8% in 2024, citing resilient electrical and electronics (E&E) shipments and stronger demand across key markets.
RHB Research was even more optimistic, lifting its full-year estimate to 6.8% from 4.7% previously.
Exports surged 15.7% year-on-year in October, nearly doubling Bloomberg’s consensus forecast of under 8%. The second straight month of double-digit growth was underpinned by robust E&E shipments, stronger re-exports, and broad-based gains across agriculture and mining.
Kenanga said it is revising its 2025 export growth forecast to 6% from 3.9% previously, noting that exports have already grown 6% in the first 10 months of the year, outperforming earlier projections.
The research house said October’s data ran counter to earlier assumptions that US tariff pressures would drag on global trade, with the upside driven by firm E&E demand and consistently strong exports to major markets other than the US.
"Going forward, Malaysia’s exports may sustain their expansion if E&E demand holds up," it said in a note following the release of the official trade data by the Department of Statistics Malaysia.
MBSB, which also lifted its 2025 forecast to 6%, said the upgrade reflected “front-loaded E&E shipments, deeper market penetration and stronger re-exports, which offset the impacts of higher US tariffs and averted a sharper external trade slowdown”.
RHB, in upgrading its 2025 forecast to 6.8%, cited the average 14% jump in exports in September and October. It added that optimism for 2025 and 2026 had strengthened following the easing of tariff risks and the continued resilience of E&E exports.
"Malaysia’s overall export performance is expected to be buoyed by clearer guidance on US tariff rates and a diversified export base. A broadly uniform US tariff rate across Asean should also help sustain Malaysia’s regional competitiveness," said RHB.
Tech cycle, re-exports and regional demand underpin outlook
Economists broadly agreed that Malaysia’s near-term export outlook will remain anchored by the global tech cycle. Kenanga said the sector would continue to benefit from “increasing adoption of AI, 5G and EVs”, with semiconductors notably exempted from recent US tariffs.
Echoing this view, MBSB said “E&E exports should stay resilient amid the global tech upcycle”. It noted that semiconductor exports surged 42% and telecoms components jumped 56.8% in October, nearly doubling the pace seen the month before.
Meanwhile, UOB highlighted that structural shifts from global tariff realignment and the AI cycle will help sustain momentum into next year, alongside Asean and EU demand — both of which recorded strong double-digit increases in October.
Across the five research houses, re-exports were cited as a key driver of October’s gains. Re-exports surged 36.4%, lifting their share of total exports to 26.4% and reinforcing Malaysia’s role as a regional distribution hub.
External headwinds remain
Despite broad-based optimism, economists stressed that Malaysia still faces persistent external risks.
Kenanga warned that commodity-related exports remain sensitive to global economic and political uncertainties, US trade policy shifts and demand conditions in major economies such as the US, China and the EU. It also flagged the possibility that “the impact of US tariff on global economy may be delayed to next year”, potentially softening Malaysia’s 2026 outlook.
MBSB also flagged tariff-related downside risks, saying “potential tariffs on semiconductors still pose downside risk to the tech sector and Malaysia’s export outlook”. Shipments to the US fell 2.6% in October.
CIMB highlighted that while E&E performance has been exceptionally strong, the broader export base remains uneven. It noted persistent contractions in beverages and tobacco, crude minerals, chemical products and manufactured goods.
"This persistent drag underscores a broader external-sector vulnerability heading into 2026," it said, adding that it expects external demand to soften next year as global trade momentum eases.
UOB warned that US sector-specific tariffs remain a risk, though partly offset by the reciprocal tariff agreement and the one-year US-China trade truce, which reduces the likelihood of immediate escalation.
RHB, meanwhile, said near-term semiconductor tariff risks appear limited due to the deep integration of US firms in Malaysia, with 65% of Malaysia’s semiconductor exports to the US produced by American companies based locally.
"Despite lingering policy uncertainty, sustained global semiconductor demand — driven by AI and other emerging technologies — remains a key tailwind for Malaysia, alongside its diversified export destinations," it said.
Source: theedgemalaysia