KUALA LUMPUR (Jan 21): Malaysia's exports are expected to continue growing in the coming months as external demand picks up ahead of potential US tariffs that will disrupt global trade, economists said.

Global demand will recover further, driven by the tech upcycle and easing monetary policies that will extend into 2025, CIMB Securities said in a note on Tuesday. Strategic location, advanced trade infrastructure and supportive policies will help Malaysia weather downsides, it said.

“Malaysia’s external trade outlook remains supported,” CIMB said. The research house forecasts gross exports to expand 5.3% this year, alongside a 5.6% rise in total imports.

The latest official data on Monday showed Malaysia exports grew 5.7% last year, partly fuelled by record-high demand from the US and Taiwan, while imports were up more than 13%, according to the Ministry of International Trade and Industry.

Outbound shipments in the final month of December jumped to a 27-month high and were stronger than expected, thanks to a surge in deliveries of electronics and other manufactured products.

The strong showing of both exports and imports in December were likely due to “front-loading” ahead of Donald Trump’s second term as US president, said Maybank Investment Bank.

The outlook for 2025 is clouded by uncertainties and fluid news flows over Trump 2.0’s trade and tariff policies, the research house flagged, as it projected slower growth for exports at 4.5% and imports at 6.3%, resulting in lower trade surplus of RM120 billion versus RM136.9 billion in 2024.

For Hong Leong Investment Bank, Malaysia's non-aligned stance, diverse export base and trade diversions arising from renewed US-China trade war are expected to partly cushion the impact of global uncertainties. The research house maintained its projections for the economy to expand 4.9% in 2025.

Even before taking office, Trump has threatened to unleash massive tariffs, including even goods imported from allies. He has promised far more prohibitive trade policies than those implemented during his previous term.

In particular, he has threatened tariffs targeted at several countries including China, Malaysia’s biggest trading partner. That has pushed multinational corporations to divert and diversify their manufacturing bases out of China, benefitting Malaysia and other countries in the region.

BIMB Securities, meanwhile, noted that agriculture exports, which surged by nearly 12% in 2024 on higher prices of palm oil and natural rubber, are expected to grow further this year on favourable global commodity prices.

In contrast, mining exports, which declined by 2.4% in 2024, may remain subdued in 2025 due to weaker global oil prices and limited upstream activities caused by unplanned repair works, BIMB said.