Malaysia’s trade hits record RM3.1 trillion in 2025, with exports beating forecast

[KUALA LUMPUR] Malaysia’s trade hit a record high at the end of 2025, as a surge in electronics exports pushed total commerce past RM3 trillion (S$949 billion) for the first time and capped a year of stronger-than-expected economic growth.

Total trade in December expanded by 11.1 per cent year on year to RM286.6 billion, supported by double-digit growth in both exports and imports, according to data released on Tuesday (Jan 20) by the Ministry of Investment, Trade and Industry.

The out-turn comfortably beat market expectations and marked a sharp acceleration from November’s softer performance.

Exports rose 10.4 per cent in December 2025 from a year earlier to RM153 billion, driven largely by stronger shipments of electrical and electronic products.

The December result outpaced November’s 7 per cent growth and was well above the 2.5 per cent increase forecast by economists in a Reuters poll.

Imports climbed 12 per cent year on year to RM133.7 billion, exceeding an analyst estimate of 8.5 per cent, as firmer domestic demand and manufacturing activity lifted purchases of intermediate and capital goods.

Malaysia recorded a trade surplus of RM19.3 billion in December, marginally higher by 0.1 per cent from a year earlier.

For the full year, total trade rose 6.3 per cent to a record RM3.1 trillion, while exports, imports and the trade surplus increased by 6.5 per cent, 6.2 per cent and 9.2 per cent, respectively, compared with 2024.

“This performance was achieved despite rising global uncertainties, including geopolitical tensions, supply-chain realignments and rising risks of protectionism,” the trade ministry said in a statement.

US demand lifts exports

The United States and Singapore remained Malaysia’s two largest export destinations in December, together accounting for 31.3 per cent of total outbound shipments, according to data from Department of Statistics Malaysia (DOSM).

Exports to the US surged nearly 49 per cent year on year to RM28.2 billion, making it Malaysia’s top destination with an 18.4 per cent share of total exports.

The increase was driven by a sharp rise in electrical and electronic shipments, which jumped 73.2 per cent, as well as stronger exports of optical and scientific equipment, which rose 47.7 per cent.

By contrast, exports to Singapore fell nearly 13 per cent to RM19.7 billion, reflecting weaker shipments of electrical and electronic products, down 17.7 per cent, and petroleum products, which declined 34 per cent.

On the import side, China and Singapore were the two largest sources of goods, together contributing 35.9 per cent of Malaysia’s total imports in December.

Shipments from China rose 29 per cent year on year to RM35.3 billion, accounting for 26.4 per cent of total imports. The increase was driven by higher purchases of electrical and electronic products, up 38 per cent, and a surge in transport-equipment imports, which jumped 182.6 per cent.

Imports from Singapore declined 7 per cent to RM12.6 billion, or 9.5 per cent of total imports, weighed down by lower purchases of petroleum products, which fell 10.5 per cent, and electrical and electronic products, down 5.6 per cent.

For the full year, trade with China – Malaysia’s largest single trading partner – expanded by nearly 12 per cent from 2024.

Exports to the US remained resilient, rising 17.2 per cent year on year, with overall trade between the two countries growing 13 per cent.

Growth beats forecasts

The strong trade performance coincided with Malaysia’s economy expanding faster in 2025 than previously projected.

During Prime Minister’s Question Time in parliament on Tuesday, Anwar Ibrahim said the country’s economy grew by 4.9 per cent last year, citing advance estimates from DOSM. The figure exceeded earlier government and central-bank projections of between 4 and 4.8 per cent.

“History is made. Total trade last year surpassed RM3 trillion for the first time,” PM Anwar told lawmakers.

Advance estimates released last Friday showed that the economy likely expanded 5.7 per cent in the fourth quarter, supported by broad-based growth across major sectors.

According to DOSM, the services sector advanced 5.4 per cent, manufacturing expanded 6 per cent, and construction grew 11.9 per cent, while agriculture and mining and quarrying recorded growth of 5.1 per cent and 1.1 per cent, respectively.

Anwar also highlighted improving labour-market conditions, noting that the unemployment rate fell to 2.9 per cent in November, the lowest level in 11 years.

Inflation still benign

Inflation moved higher in December after a prolonged period of moderation. Headline inflation rose to 1.6 per cent from 1.4 per cent in November, marking the first increase above the 1.5 per cent level in 11 months.

For the full year, inflation averaged 1.4 per cent in 2025, down from 1.8 per cent in 2024 and the lowest level since 2020. The December uptick was driven mainly by higher prices for personal care, social protection and miscellaneous goods and services.

Core inflation, meanwhile, edged up to 2.3 per cent in December 2025 from 2.2 per cent a month earlier.

Slower, steadier 2026 ahead

Looking ahead, the government expects trade growth to moderate in 2026, projecting a 3.3 per cent increase supported by a 2.8 per cent rise in exports and a 3.9 per cent increase in imports.

Official economic growth is forecast at between 4 and 4.5 per cent.

Standard Chartered chief economist Edward Lee and economist Jonathan Koh expect growth to ease to 4.5 per cent in 2026, at the upper end of the official forecast, as export momentum normalises while domestic demand remains resilient.

“Malaysian household consumption should remain stable amid a healthy labour market, while global trade risks persist, with the normalisation of exports likely to weaken export growth contribution,” they said in a note on Tuesday.

Standard Chartered lowered its 2026 inflation forecast to 1.7 per cent from 2.3 per cent previously and expects Bank Negara Malaysia to keep the overnight policy rate unchanged at 2.75 per cent, citing global tariff uncertainty as a key downside risk to growth.

On the fiscal front, the government is projected to narrow the deficit to 3.5 per cent of gross domestic product in 2026 from 3.8 per cent in 2025.

Trade risks linger

Analysts cautioned that external risks remain elevated despite the strong close to 2025.

UOB senior economist Julia Goh and economist Loke Siew Ting expect inflation to trend higher in 2026, with full-year average inflation forecast at 2 per cent, though still within the finance ministry’s projected range of 1.3 to 2 per cent.

“With inflationary pressures remaining contained and domestic growth set to stay resilient in 2026, we see no compelling reason for Bank Negara Malaysia to alter its monetary policy stance in the near term,” they said in a report, adding that the central bank is likely to remain vigilant against global financial market volatility.

The next policy decision by Bank Negara’s monetary policy committee is due on Jan 22, and the central bank will be announcing the official 2025 GDP data on Feb 13.

MBSB Research maintained its 2026 growth forecast at 4.3 per cent, with domestic demand expected to remain the key driver, but warned that tighter global trade rules could weigh on exports.

“We are still cautious that the trade outlook could be affected by tighter trade rules, with the US planning to broaden tariffs to the semiconductor industry,” said MBSB.

Despite the resilient external trade performance in the final months of 2025, the research house flagged concerns over a narrowing trade surplus as imports rose faster than exports.

However, MBSB believes robust domestic activity and a boost in services exports from rising foreign tourism likely cushioned this drag, further supported by increased domestic spending.