20/09/2025 (Business Today) - Malaysia’s export growth slowed sharply to 1.9% year-on-year in August (July: +6.5%), missing consensus expectations of 3.0% but faring better than Kenanga Investment Bank’s forecast of a 2.0% contraction.

On a month-on-month basis, exports dropped 6.0%, retreating to a seven-month low after July’s strong rebound. The downturn was largely attributed to weaker shipments to the United States and softer demand for electrical and electronic (E&E) products.

Exports to the US plunged 16.7%, the steepest in 20 months, hit by higher tariffs. Shipments to Singapore (+2.7%) and Taiwan (+32.7%) also slowed, while stronger exports to China (+10.4%) provided partial support.

By sector, manufacturing exports moderated to +1.7% (July: +8.7%), while mining exports stayed weak at -2.4%. Agriculture bucked the trend, rebounding 4.5% after July’s 9.8% decline. E&E shipments, which make up 42.2% of total exports, eased to +10.1% (July: +22.5%). Meanwhile, crude petroleum (-28.8%), petroleum products (-17.6%) and LNG (-2.6%) posted further declines, though palm oil and palm-based products rebounded by 9.7%.

Imports contracted sharply by 5.9% (July: +0.6%), the steepest since September 2023 and below consensus expectations (-0.4%). Retained imports fell for the second consecutive month (-12.4%), while intermediate (-16.8%) and consumption goods (-8.9%) dropped further. Capital goods growth slowed to +11.0% from +20.3% in July.

Despite softer trade flows, Malaysia’s trade surplus widened to RM16.1 billion (July: RM14.6 billion), exceeding both Kenanga’s forecast (RM4.4 billion) and market expectations (RM11.3 billion).

Total trade contracted 1.9% YoY, marking a 20-month low, while falling 6.9% MoM after July’s surge.

Looking ahead, Kenanga maintained its 2025 export growth forecast at 3.1% (2024: 5.7%), with exports expanding 3.9% in the first eight months of the year. The bank highlighted resilient E&E demand from the adoption of AI, 5G, automation, and EVs, though warned that US trade policy uncertainty, divergent global growth, and geopolitical tensions pose risks to the outlook.

Kenanga also retained its 2025 GDP growth forecast at 4.3% (2024: 5.1%), expecting a slight moderation in the second half of the year (1H25: +4.4%). It noted that accommodative monetary policy, the realisation of approved investments, and continued tourist arrivals should support growth, with upside potential if trade partners perform better than expected.

https://www.businesstoday.com.my/2025/09/20/malaysias-export-growth-sustained-by-robust-ee-demand/