Economic Update
Local
Malaysia External Trade - Upside to growth on positive trade
Wed, 21-Jan-2026 07:07 am
by To Zheng Hong • Apex Research

  • Malaysia’s exports accelerated to +10.4% YoY in December 2025 (Nov: +7.0%), well above consensus of +2.5%, while imports maintained double-digit growth of +12.0% (Nov: +15.8%). The trade surplus widened sharply to RM19.3bn (Nov: RM6.1bn). 

  • For full-year 2025, exports and imports expanded by +6.5% YoY and +6.2% respectively (2024: +5.8% and +13.1%).

  • Export strength was driven by manufactured goods (+13.6% YoY; Nov: +7.9%), led by robust E&E. In contrast, mining (-15.2%; Nov: +9.4%) and agriculture (-7.4%; Nov: -6.1%) weighed on overall export performance. 

  • We view the decline in capital goods imports (-11.8% YoY; Nov: +56.6%) as a temporary breather. Investment momentum should remain intact in 2026, supported by ongoing infrastructure projects and continued data centre expansion. 

  • Improving global growth and a steady global semiconductor outlook amid the AI-led upcycle should continue to support Malaysia’s external sector. That said, potential semiconductor tariffs, geopolitical tensions and a stronger ringgit remain key risks. 

  • We maintain our 2026 export growth forecast at +4.8% YoY and GDP growth at +4.3% for now. A sustained improvement in early-2026 data could warrant an upward revision.

 

A strong December surprise           

Malaysia’s exports accelerated to +10.4% YoY in December 2025 (Nov: +7.0%), well above Bloomberg consensus of +2.5%. Imports maintained double-digit growth of +12.0% (Nov: +15.8%), driven by intermediate and consumer goods. As a result, the trade surplus widened sharply to RM19.3bn (Nov: RM6.1bn). For full-year 2025, exports and imports expanded by +6.5% and +6.2% respectively (2024: +5.8% and +13.1%), underscoring trade resilience despite US tariff implementation.

 

Manufacturing-led expansion; offset by commodities   

Export strength was driven by robust manufactured goods (+13.6% YoY; Nov: +7.9%), with E&E products maintaining strong double-digit growth (+25.3%; Nov: +15.0%) amid the AI-led global tech upcycle. Non-E&E manufacturing rose at a modest pace (+1.8%; Nov: +1.4%), supported by machinery, equipment & parts (+11.3%; Nov: +5.1%), iron & steel (+28.2%; Nov: -20.1%) and chemical products (-6.5%; Nov: -14.8%).

 

In contrast, mining exports contracted sharply (-15.2% YoY; Nov: +9.4%), reflecting declines in LNG (-24.9%; Nov: -12.5%) and crude petroleum (-38.8%; Nov: +6.0%), partly due to high base effect in the corresponding period last year. Agriculture exports declined further (-7.4%; Nov: 
-6.1%), alongside a 21.0% decline in palm oil prices to RM4,043/mt.

 

By destination, shipments to the US rebounded strongly (+48.8% YoY; Nov: -0.8%), which we believe was supported by E&E. Exports to the EU (+34.8%; Nov: +13.2%) and India (+10.7%; Nov: +4.7%) also strengthened. Meanwhile, exports to China (-3.5%; Nov: +9.8%) and Singapore 
(-12.8%; Nov: +4.1%) declined after five consecutive months of expansion.

 

Investment momentum remains intact in 2026         

Import growth was supported by positive intermediate goods (+3.6% YoY; Nov: +5.0%), pointing to steady order pipelines and solid export momentum ahead. Consumer goods imports rebounded sharply (+27.6%; Nov: -1.5%), reflecting resilient demand for imported durables. 

 

Capital goods imports, typically a leading indicator of investment, declined 11.8% YoY (Nov: +56.6%). We view this as a temporary breather, reflecting a short pause in capital purchasing that has historically rebounded quickly in subsequent months. Investment momentum should remain intact in 2026, supported by ongoing infrastructure projects and continued data centre expansion amid the global tech upcycle. Our view is reinforced by BNM’s assessment that data centres accounted for 51% of net FDI inflows in 2024. We forecast a steady real private investment growth of +8.0% in 2026 (2025E: +9.8%).

 

Upside to 2026 GDP growth; volatility ahead   

The strong December exports print reinforces our view that positive trade momentum will extend into 2026. Global growth has proven more resilient than expected despite earlier tariff concerns. The World Bank recently revised its 2026 global growth forecast higher by 0.2ppt to +2.6% YoY (2025: +2.7%), led by firmer US growth (+2.2%; 2025: +2.1%). A steady global semiconductor outlook amid the AI-led upcycle should remain a key support for Malaysia’s external sector. 

 

Nonetheless, we remain cautious over external risks, including potential semiconductor-related tariffs on Malaysia. Geopolitical tensions and trade disruptions may resurface, as tariffs remain a central policy theme under the Trump administration. Lastly, a stronger ringgit could pose some downward pressure on export-oriented industries.

 

Following solid export growth of +6.5% YoY in 2025, we maintain our 2026 export growth forecast at +4.8%. Correspondingly, we keep our 2026 GDP growth forecast of +4.3% for now. A sustained improvement in early-2026 data could warrant an upward revision to our forecasts.

Sentiment: Positive
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