Exports remained resilient at +10.8% YoY in February (Jan: +19.6%), slightly below consensus, while imports rose to +8.2% (Jan: +4.8%). The trade surplus narrowed to RM16.7bn (Jan: RM22.0bn).
Manufacturing exports slowed (+12.8% YoY; Jan: +22.3%), but E&E continued to record strong double-digit growth, while commodity exports remained weak.
On a 3-month moving average (3mma) basis, capital goods imports fell (-8.4% YoY; Jan: +2.2%) for the first time in over two years, warranting close monitoring in our view.
Key external risks include US trade policy uncertainty and escalating geopolitical tensions in the Middle East. The direct impact of the Middle East conflict on Malaysia should be limited given our relatively small trade exposure to the region.
We maintain our 2026 export growth forecast at +4.8% YoY (2025: +6.4%) for now, pending greater clarity on tariff policies and developments in the Middle East conflict.
Exports remain on a firm footing
Malaysia’s exports remained resilient at +10.8% YoY in February, albeit easing from January’s +19.6% surge and coming in below consensus of +12.2%. Imports rose to +8.2% (Jan: +4.8%), reflecting a rebound in capital and intermediate goods. As a result, the trade surplus narrowed to RM16.7bn (Jan: RM22.0bn).
Manufacturing takes a breather
The softer export print was mainly due to slower manufacturing growth (+12.8% YoY; Jan: +22.3%). That said, E&E products continued to record strong double-digit growth (+28.5%; Jan: +39.5%) amid the AI-led global tech upcycle. Non-E&E manufacturing declined (-1.1%; Jan: +6.1%), dragged by petroleum products (-23.5%; Jan: -16.7%), chemical products (-16.7%; Jan: -7.8%) and slower growth in machinery, equipment & parts (+0.4%; Jan: +12.7%).
Commodity exports remained weak. Agriculture exports fell further (-16.4% YoY; Jan: -2.5%) alongside a 14.3% YoY decline in palm oil prices to RM4,078/mt. Meanwhile, liquefied natural gas (LNG) exports dropped sharply (-27.3%; Jan: -5.2%), largely due to a 19.6% decline in average unit value.
By destination, shipments to Singapore contracted (-17.1% YoY; Jan: +0.4%), while exports to China moderated (+13.2%; Jan: +16.1%). Exports to other key Asian markets were mixed, particularly Japan (-14.8%; Jan: -0.4%), Taiwan (+65.9%; Jan: +79.4%) and Indonesia (-36.0%; Jan: +10.0%). In contrast, exports to the US recorded the third straight month of double-digit growth (+42.3%; Jan: +33.9%), while shipments to the EU (+33.9%; Jan: +26.0%) strengthened.
Capital imports reaffirm investment momentum
Capital goods imports rebounded (+15.4% YoY; Jan: -21.0%), suggesting that investment momentum remains firm, in line with ongoing infrastructure projects and continued data-centre expansion. Nonetheless, capital goods imports are inherently volatile. On a 3-month moving average (3mma) basis, capital goods imports fell (-8.4%; Jan: +2.2%) for the first time in over two years, warranting close monitoring in our view.
Meanwhile, intermediate goods imports rebounded (+0.8% YoY; Jan: -5.0%) after a brief pullback in January, pointing to firmer order pipelines. Our baseline remains that external demand will stay broadly resilient despite rising global uncertainties.
Renewed external headwinds cloud trade outlook
Malaysia’s exports recorded a solid +15.2% YoY growth in 2M26, supporting our positive stance on the trade outlook. A steady global semiconductor demand amid the AI-led upcycle remains a key support for Malaysia’s external sector in 2026. The Semiconductor Industry Association (SIA) reported a +46.1% increase in global semiconductor sales to USD82.5bn in January, with sales projected to reach USD1tn in 2026 (2025: USD800bn).
That said, global trade conditions remain fluid. Key external risks include US trade policy uncertainty and escalating geopolitical tensions in the Middle East. While the US Supreme Court has ruled to nullify the reciprocal tariffs imposed under IEEPA, the Trump administration’s trade stance remains largely unchanged. The administration has imposed a 10% global tariff for 150 days under Section 122 and is reportedly working to raise the rate to 15%. It has also used the 150-day window to launch Section 301 investigations into alleged unfair trade practices involving several trading partners, including Malaysia.
We also remain cautious on the Middle East conflict, with secondary risks from supply chain disruptions and weaker global growth weighing on trade. Nonetheless, the direct impact on Malaysia should be limited given our relatively small trade exposure to the region. As a net energy exporter, higher oil & gas prices could partly cushion export performance against potentially softer external demand.
Maintaining forecasts for now
Overall, we maintain our 2026 export growth forecast at +4.8% YoY (2025: +6.4%). We also maintain our 2026 GDP forecast at +4.7% (2025: +5.2%) for now, pending greater clarity on tariff policies and developments in the Middle East conflict.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
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