Malaysia’s export growth disappoints as trade with US falls

KUALA LUMPUR – Malaysia’s exports increased less than expected as higher US levies that took effect in August disrupted the South-east Asian nation’s trade with the world’s largest economy. 

Exports rose 1.9 per cent in August from a year earlier, according to Malaysia’s Investment, Trade and Industry Ministry. That is lower than the 3 per cent median estimate in a Bloomberg survey.

Shipments to the US fell 16.7 per cent year on year, while imports declined 36.7 per cent. Trade with its major trading partner slumped by 25 per cent. “The overall decline in trade with the US may reflect the early impact of recent tariff adjustments introduced by the US government,” the ministry said in a statement on Sept 19.

The ministry urged exporters to improve and diversify their product offerings, as well as utilise free trade agreements with other countries to mitigate any blow from the global trade chaos brought by shifts in policy.

The US – which accounts for 10.6 per cent of Malaysia’s total trade – imposed a 19 per cent tariff on the Asian nation’s goods on Aug 7, lower than the 25 per cent rate Mr Trump had threatened in July. 

Exports to China – which made up about 18 per cent of Malaysia’s total trade – climbed 10.4 per cent in August, helping to offset the drop in shipments to the US.

The central bank in August cautioned that exports will slow for the rest of 2025, and lowered in July its growth forecast for the year to 4 per cent to 4.8 per cent, from as high as 5.5 per cent.

Bank Negara Malaysia cut its overnight policy rate for the first time in five years in July in a pre-emptive move to support the economy. The monetary authority also released more funds into the banking system to encourage lending and help boost activity. BLOOMBERG