Exports grew just 0.3% year-on-year, contrasting sharply with December’s 16.9% growth and way below Bloomberg’s consensus forecast of 5%. This marked the slowest pace since September 2024, when exports contracted by 0.3%.
However, research houses are not too perturbed by the marginal export growth last month, attributing it to a high base effect from last year and a shorter working month due to the Chinese New Year holiday.
They acknowledged that while the slow start to the year was partly seasonal, it does highlight some broader risks to the country’s external trade.
They pointed to risk factors such as the impact of US tariffs on semiconductors and high-tech products, an imminent semiconductor downcycle, and softer demand from key markets like China.
US president Donald Trump’s administration recently imposed a 25% tariff across the board for steel products imported into the country, as well as threatening to impose a 25% tariff on automobiles, pharmaceuticals and semiconductors.
Malaysia’s largest exports are electrical and electronic products, which made up 39.9% of the country’s export values in 2024, or around RM601.2 billion. The US imported US$52.5 billion (RM232 billion) worth of goods from Malaysia in 2024.
The country’s trade surplus also fell sharply to RM3.6 billion in January, down 81% from RM19.1 billion in December 2024. On a year-on-year basis, the trade surplus fell 64% from RM10.2 billion in January 2024.
MIDF Research said uncertainties surrounding US trade policies and weaker demand from key trading partners could impact Malaysia’s trade performance.
“Escalating trade tension with unfavourable tariffs and quotas, particularly the planned tariffs on semiconductors could weigh on Malaysia’s exports and cloud trade outlook,” it said in a note.
Solid fundamentals
Nevertheless, the research house expects external trade to continue growing this year. It projected exports to grow at 4.9% this year, supported by steady demand for E&E products and commodities.
“We believe Malaysia is well-positioned to navigate the challenging trade landscape due to solid economic fundamentals, with continued support from growing domestic demand, resilient household spending, and increased investments,” it said.
RHB Research said while Malaysia’s exports are not spared from the impact of US tariff policies, its neutral stance and diversified trade relationships position it well to navigate these challenges.
It also said Malaysia’s export-oriented industries stand to benefit from a positive global economic outlook, supported by easing global monetary conditions and resilient growth in major economies.
However, it noted that broader impacts of supply chain disruptions and inflationary pressures could still weigh on the country’s trade performance.
Meanwhile, UOB Global Economics & Market Research maintained its forecast for Malaysia’s export growth at 4.5% for 2025, which is higher than the government’s forecast of 3.9% for the year.
The research firm was cautious on Malaysia’s trade outlook in light of US tariff uncertainties, signs of a semiconductor downcycle, and the continued decline in mining exports.
It also flagged concerns over Malaysia’s current account balance, noting that the smaller trade surplus in January suggests a narrower current account surplus in the first quarter of 2025.
“At this juncture, we do not expect the current account to turn into a deficit this year provided the global trade outlook holds up a moderate growth momentum and the global economy remains on track for a soft landing,” it said.
The government and Bank Negara Malaysia forecast the economy to expand between 4.5% and 5.5% in 2025.
BNM said going into 2025, inflation is expected to remain manageable amid the easing global cost conditions and absence of excessive domestic demand pressures.