Some analysts expect Malaysia’s export growth to moderate between 2.0 per cent and 3.1 per cent this year, reflecting a cautious outlook in light of persistent trade uncertainties.
MIDF Research projects export growth to slow to 2.0 per cent in 2025, while import growth is expected to ease to 4.5 per cent.
The firm noted that in the short term, the positive impact of front-loading activities during the 90-day tariff suspension on exports may be weaker than initially anticipated.
“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. However, if Malaysia manages to secure tariffs below 10 per cent for strategic sectors, particularly electrical and electronics (E&E), it could provide an added relief from ongoing external trade challenges,” it said.
In contrast, the firm cautioned that the possibility of higher tariffs and softer demand from major trading partners remains a downside risk to Malaysia’s trade outlook.
“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,” it added.
MIDF Research said with ongoing uncertainties in external trade, strong domestic consumption is still expected to be the main driver of Malaysia’s economic growth.
Meanwhile, Kenanga Research revised Malaysia’s 2025 export growth forecast down to 3.1 per cent, from the previously projected 5.0 per cent.
This is due to expectations of a weaker performance in the second half of the year (2H25), despite a strong showing in April.
The firm noted that export growth picked up to 7.3 per cent in the first four months of the year, compared to 4.4 per cent in the January-March period.
It also said the 90-day suspension of US President Donald Trump’s reciprocal tariffs is likely to support export performance in the second quarter of 2025 (2Q25), as businesses rush to ship goods ahead of possible tariff hikes in July.
“Growth will also benefit from the ongoing global tech upcycle, driven by artificial intelligence related demand, new product launches, and potential trade diversion as the US decouples from China,” it said.
Kenanga Research said Trump’s tariffs and ongoing policy uncertainty continue to pose significant risks to global growth and trade prospects, with potential spillover effects on wider segments of the economy.
“Additionally, a disappointing China’s recovery could further weigh on our outlook. Therefore, we remain cautious on the 2H25 outlook due to the lagged effect of Trump’s tariffs and its policy uncertainty, as the current momentum is unlikely to sustain towards the end of the year,” the firm adds.
Kenanga Research lowered its 2025 gross domestic product (GDP) growth forecast to 4.3 per cent, from 4.8 per cent, following the weaker-than-expected first quarter growth of 4.4 per cent, compared to 5.1 per cent in 2024.
“Nevertheless, we expect frontloading activity in 2Q25 as reflected in April’s exports to support overall growth and may offset a softer 2H25 if external headwinds worsen,” it said.
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