12 hours Ago By S. BIRRUNTHA
KUALA LUMPUR: Malaysia's record trade numbers show strong economic growth, but keeping up this momentum is expected to become tougher due to the rise of global protectionism.Malaysia's trade maintained its growth trajectory in March 2025, marking the 15th consecutive month of year-on-year (YoY) expansion.UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan said the country's trade resilience is underpinned by our strategic positioning within global supply chains, particularly in high-value sectors like electronics and semiconductors, which benefited from an 8.
9 per cent growth in manufacturing exports. He added that the trade surplus of RM24.7 billion, up 94.
4 per cent from the previous year, further highlights the strength of this recovery. However, Mohd Sedek noted that the sustainability of this growth faces serious headwinds from rising global protectionism. He highlighted that a 24 per cent tariff on Malaysian goods poses a significant threat, as it could reduce the country's export competitiveness in the US, which accounts for about 10 per cent of total exports.
"Another factor to consider is the likelihood that importers have begun stockpiling inventories in anticipation of impending tariff hikes. "This front-loading behaviour, common during periods of trade policy uncertainty," he told Business Times. Nevertheless, Mohd Sedek said leveraging Asean cohesion and mitigating volatility from inventory adjustments will be essential to preserving trade momentum in an increasingly fragmented global economic landscape.
He added that Malaysia has made notable strides in diversifying its export markets and The strategic partnership with China will help. "The top 30 export destinations accounted for 96.4 per cent of total exports (RM132.
3 billion), with significant growth in markets like the US, Singapore and Taiwan. "This diversification is further supported by the agricultural sector's, with palm oil and palm-based products comprising 70.8 per cent of agricultural exports, and emerging markets like Switzerland (77.
9 per cent increase) and Costa Rica (78.4 per cent increase) showing promise. "More aggressive diversification - beyond the current top 30 - into emerging markets like Africa or Latin America, alongside accelerated Asean integration, is needed," he said.
Mohd Sedek also said tariff threats, while disruptive, may also create unexpected openings for trade realignment, offering countries like Malaysia a chance to enhance their global positioning. He added that in line with the classical theory of comparative advantage, relative tariff differentials could potentially work in Malaysia's favour if competitors are subjected to steeper trade barriers. "Past trends have shown that when tariffs are unevenly applied, export flows tend to shift towards economies with more favourable access conditions, thereby boosting demand for their goods.
"Today trade data appears to reflect this dynamic, with notable increases in certain export categories, particularly in electronics and key commodities - which may be linked to ongoing shifts in global supply chains. "These movements suggest that some firms are already adjusting their sourcing strategies in anticipation of future tariff regimes," he said. Mohd Sedek said a temporary suspension of recently proposed tariffs presents a narrow but crucial window for affected exporters to either negotiate exemptions or reposition themselves within alternative trade corridors.
He said this short-term reprieve has stimulated immediate demand in sectors most exposed to the tariff adjustments, encouraging ramp-ups in production and delivery timelines. Malaysia's trade grew 2.2 per cent to RM249.
89 billion in March, the highest ever for the month, marking the 15th consecutive month of YoY expansion since January 2024. This growth was driven by a 6.8 per cent increase in exports, which reached RM137.
31 billion, setting a new March record, while imports fell by 2.8 per cent to RM112.59 billion.
"Trade surplus grew by 94.4 per cent from March last year to reach RM24.72 billion, the highest value recorded since June 2023.
"This was the 59th consecutive month of surplus since May 2020," Investment, Trade and Industry Ministry said in a statement. The increase in exports was driven by stronger demand for manufactured goods, especially electrical and electronic products, which posted their highest monthly value to date with a YoY growth of over RM12 billion. Exports of agricultural products, particularly palm oil and palm oil-based items, also played a key role in supporting the overall export growth.
In terms of markets, exports to major trading partners namely Asean, the United States (US), the European Union and Taiwan, posted expansion with exports to the US soaring to a new record high. "Similarly, higher exports were seen to free trade agreement partners such as Hong Kong SAR, Turkiye, Canada and Chile. From January to March 2025, Malaysia registered its highest-ever first quarter values for trade, exports, and imports.
Despite uncertainties in the global trade landscape stemming from US tariffs, MITI said Bank Negara Malaysia has upheld its 2025 gross domestic product growth forecast of between 4.5 per cent and 5.5 per cent.
"For now, exports for 2025 are anticipated to grow by 5.2 per cent. Moving forward, however, there is a need for caution given the uncertainties of global demands, which may temper growth in investments and domestic demand.
"As a small, open trading nation, Malaysia is inevitably exposed to heightened external uncertainties in the global trading landscape," it said. In light of the current situation, the ministry together with its key export-oriented agency will remain vigilant in tracking global developments to protect Malaysia's economic interests and maintain the momentum of trade growth.© New Straits Times Press (M) Bhd.
