Malaysia’s External Trade To Remain At 5 Pct In 2025
KUALA LUMPUR, March 21 (Bernama) -- Kenanga Investment Bank Bhd expects Malaysia’s external trade to remain at five per cent in 2025, despite a slower-than-expected February performance, supported by global technology demand and other factors.
In a research note Friday, the investment bank said that although February’s performance missed its target, it expects frontloading activity to accelerate in March ahead of United States (US) President Donald Trump’s reciprocal tariffs taking effect in April.
“This may not be sustainable for the rest of the year, but the global tech sector should support export growth, driven by artificial intelligence (AI)-related demand, trade diversion spillovers, and expectations of economic recovery in key trading partners.
“Demand is expected to rise from China and, potentially, Europe following the spillover effects of stimulus injections and monetary easing,” it said.
However, Kenanga cautioned that uncertainty over the US economy, particularly due to higher tariffs, remains a key concern, as a significant reduction in US imports could weigh on global trade given the country’s role as a key consumer market and major destination for Malaysian exports.
The bank also highlighted risks such as a slower-than-expected economic recovery in China and potential global trade disruptions from Trump’s tariffs, which could dampen consumer and business sentiment.
On gross domestic product (GDP), Kenanga maintained its 2025 GDP growth forecast at 4.8 per cent, supported by domestic demand, particularly higher private consumption and investment.
“Overall moderation reflects a base effect, the normalisation of domestic economic activity, and uncertainties arising from global policy shifts under the Trump administration,” it noted.
Separately, Public Investment Bank Bhd (PIVB) maintained its forecast for Malaysia’s export growth at four per cent in 2025, citing elevated trade policy uncertainty, including the pending announcement of US reciprocal tariffs and the risk of retaliatory measures from key trading partners.
PIVB warned that escalating tariffs could have wider economic implications beyond trade flows, as heightened policy uncertainty may lead firms to reassess supply chain resilience and capital allocation strategies.
“A prolonged deterioration in global trade relations could weigh on business sentiment, delaying capacity expansion in key industries such as semiconductors as well as electrical and electronics, which are central to Malaysia’s manufacturing sector,” it said.
Additionally, the bank noted that persistent trade disruptions could exacerbate currency volatility, with the ringgit facing renewed depreciation pressures should external risks intensify.
“While near-term indicators suggest limited immediate spillovers to the semiconductor sector, we see mounting risks in the second half of 2025 as supply chain realignments, rising input costs and weaker external demand could further strain Malaysia’s export outlook.
“As geopolitical uncertainties continue to evolve, we believe close monitoring remains critical in assessing the broader implications for growth and investment,” it added.
-- BERNAMA
