Malaysia’s trade outlook for 2026 appears encouraging, with January’s strong performance signalling sustained external momentum and resilient economic fundamentals, economists said.
However, they cautioned that the country’s open economy remains vulnerable to external risks, particularly geopolitical tensions, shifts in trade policy and supply chain disruptions.
The increase from RM242 billion a year earlier was driven by robust growth in exports and imports, alongside a sharp expansion in the trade surplus, the Statistics Department said.
The trade surplus widened significantly, jumping 483.9 per cent to RM21.4 billion, marking the 69th consecutive month of surplus since May 2020.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the growth trend appears sustainable, as trade activity remains firmly in positive territory.
“The sharp rise in the trade surplus indicates that net exports are expected to contribute positively to gross domestic product (GDP) growth in the first quarter of 2026,” he told Business Times.
Mohd Afzanizam said the ringgit’s appreciation has not materially disrupted export momentum, suggesting that currency movements have remained supportive rather than restrictive.
On external risks, he said international trade has always been the immediate channel for the Malaysian economy whenever there are weaknesses in global demand.
“At this juncture, the main concern is how US import tariffs will affect demand from the United States.
“In addition, escalating geopolitical risks could lead to volatility in commodity prices, particularly crude oil, as well as disruptions to global supply chains.
“As such, downside risks are likely to stem from the external sector. It is therefore critical to ensure that Malaysia’s domestic demand remains resilient to offset potential risks from abroad,” he added.
Universiti Teknologi Mara Business Management Faculty senior lecturer Dr Mohamad Idham Md Razak said the strong expansion reflects a recovery in global demand, particularly in electrical and electronics products, as well as firmer commodity prices.
While he expects growth to moderate as base effects normalise, he described a steadier pace as healthy and consistent with stable trade performance.
“A significantly higher trade surplus strengthens external balances, improves foreign exchange inflows and enhances confidence in the country’s macroeconomic fundamentals,” he said.
UniKL Business School economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid said the latest data points to a positive outlook for Malaysia’s trade and overall economy, noting that the rise in trade in the fourth quarter of 2025 was not merely a temporary spike.
He said stability stemming from reciprocal trade agreements continues to attract foreign investment and support demand, particularly in the electrical and electronics sector, with semiconductors accounting for the largest share.
“In addition, the exemptions on 1,800 Malaysian products, particularly crude palm oil, help keep our exports globally competitive.
“However, Malaysia’s heavy integration into global supply chains, especially with key markets like China, the US and the European Union (EU), also exposes the country to risks from geopolitical tensions,” he added.
Looking ahead, Aimi said Malaysia must continue diversifying into non-traditional markets such as the Brics countries, Africa and South America.
He said exporters should be supported through financial incentives and stronger networking opportunities to help them penetrate these new markets.
He noted that Malaysia faced similar challenges during the Trump-era tariffs, which may have been underappreciated as the government successfully navigated the situation and achieved higher productivity.
Aimi also cautioned against complacency and stressed that Matrade must urgently expand its reach into new markets.
Putra Business School Professor Dr Ahmed Razman Abdul Latiff said the growth in trade has the potential to remain sustainable if no major geopolitical events occur in the coming months.
He cautioned that potential conflicts, such as a US-Iran confrontation, could create uncertainty in global markets and weigh on Malaysia’s trade expansion.
Barring unforeseen circumstances, he said the trade surplus will support overall economic growth and currency stability in 2026, helping to meet the forecasted GDP growth of 4.0 to 5.0 per cent.
Razman also highlighted the importance of diversifying demand and markets, noting that intra-Asean trade has started to gradually increase, which is an encouraging trend.
“The economy could be affected if major powers such as the US, China or Europe become involved in global economic sanctions or regional conflicts.
“Therefore, it is important to diversify demand and markets. We are seeing intra-Asean trade gradually increase, which is encouraging,” he said.
According to Matrade, exports to Asean, the US, China, the EU and Taiwan accounted for 68.2 per cent of total exports in January.
Exports to the US rose 33.9 per cent to RM23.1 billion, the highest January value on record. Shipments to China increased 16.1 per cent to RM15.47 billion, while exports to Taiwan surged 79.4 per cent to RM9.93 billion, also a record monthly high.
Closer to home, exports to Asean grew 7.1 per cent to RM39.42 billion, supported by higher shipments to seven member states, reflecting resilient regional demand and deeper supply chain integration.
By product, E&E remained the largest export segment, accounting for 48 per cent of total exports after surging 39.5 per cent to RM70.53 billion.
In a statement, Malaysia External Trade Development Corp (Matrade) said the strong performance aligned with rising global semiconductor demand, fuelled by rapid advances in artificial intelligence applications and ongoing technology upgrade cycles.
Other key contributors included optical and scientific equipment, which rose 36.2 per cent, processed food (16.5 per cent), transport equipment (13.8 per cent), and machinery, equipment and parts (13 per cent).
Exports to free trade agreement partners increased 14.5 per cent to RM95.22 billion, representing 64.8 per cent of total exports.
Growth was driven by markets such as Mexico, which surged 122.1 per cent to RM3.03 billion, Hong Kong (58 per cent), India (35.7 per cent), the United Kingdom (35.3 per cent), the Republic of Korea (27.6 per cent) and New Zealand (2.6 per cent).
Matrade chief executive officer Abu Bakar Yusof said the strong start to 2026 underscored the resilience and global competitiveness of Malaysian exporters.
He said rising E&E exports, particularly semiconductors including electronic integrated circuits, position Malaysia to benefit from the projected 26.3 per cent expansion in the global semiconductor market this year.
“High-growth and high-value sectors such as optical and scientific equipment, transport equipment particularly aerospace, and food products also recorded robust growth.
“This performance aligns with the aspirations of the New Industrial Master Plan 2030 and the 13th Malaysia Plan, which emphasise high value-added activities, innovation and the strengthening of domestic and global supply chains,” he said. – NST ONLINE
