Kuala Lumpur, 21 September 2025 — Malaysia’s trade performance and business confidence are expected to remain muted over the coming months, according to UOB Global Economics & Markets Research. The bank points to continued uncertainty around U.S. tariff actions, regulatory moves, and foreign trade policies as key drags on export growth and corporate optimism.
Exports and Imports Weaken in August
UOB’s latest data shows Malaysia’s export growth fell well short of forecasts in August. Gross exports rose only 1.9% year-on-year, a sharp drop from 6.5% in July, and well below UOB’s prediction of 4.5% growth. The slowdown was driven by weaker shipments of electrical & electronics (E&E) products, contractions in crude oil, petroleum-related goods and chemicals, counterbalancing a rebound in agricultural exports.
On the imports side, the picture was similarly soft. Overall imports contracted by 5.9%, marking the first decline in five months and the biggest drop in nearly two years. The contraction reflected steep falls in intermediate goods (-16.8%) and consumption goods (-8.9%), even as capital goods imports saw modest growth of 11.0%.
Despite imports contracting more than exports, Malaysia’s trade surplus widened to RM16.1 billion in August from RM14.6 billion in July.
What’s Driving the Uncertainty
UOB highlights several external and domestic factors contributing to the subdued outlook:
- U.S. policy risk: Tariffs under Section 232, possible restrictions on shipments tied to artificial intelligence, and other trade and regulatory measures from Washington are weighing on exporters’ planning and order flows.
- Global trade conditions: The shift in key export markets for Malaysia is consistent with the broader volatility in global trade, with firms facing both tariff and policy unpredictability.
- Domestic reforms: UOB also points to internal policy changes, such as the government’s retargeting of RON95 petrol subsidies and the rollout of e-invoicing, that may dampen business sentiment near term.
Projection & What to Expect
Even with the weak August data, UOB is maintaining its forecast that Malaysia’s full-year export growth in 2025 will be about 3.8%. Looking ahead, UOB anticipates that trade performance will be uneven through the rest of 2025 and into 2026, largely dependent on developments in U.S. trade policy and outcomes from upcoming U.S.-China trade discussions (expected by mid-November).
