Kenanga Revises Malaysia's FY GDP Downward To 4.3%
The export growth sharply beat market forecasts (KIBB: 7.2%, consensus: 7.8%) and followed a 6.8% rise in March. However, on a month-on-month (MoM) basis, exports dipped 2.7% following a strong 16.1% jump in March, indicating a cooling in momentum.
E&E Products and US Demand Power Growth
Exports were buoyed by a 35.4% surge in E&E products, the fastest pace since September 2022, amid a broader global tech upcycle driven by artificial intelligence and new tech product launches.
By destination, shipments to the US jumped 45.6%, while exports to Singapore rose 26.1%. There were also rebounds in exports to Japan (6.8%) and China (2.1%), though growth to the EU moderated to 5.8%.
By sector, manufacturing exports soared 19.0%, the highest in 31 months. However, this was partially offset by weaker mining exports (-1.3%) and a slower pace in agriculture exports (3.5%).
Notably, liquefied natural gas (LNG) exports rebounded 6.7% after four consecutive months of contraction.
Imports Rebound Sharply
Imports surprised to the upside, rebounding 20.0% year-on-year after a 2.9% decline in March, smashing expectations (KIBB and consensus: 3.3%).
The rebound was led by a 46.0% surge in re-exports and a 12.9% recovery in retained imports. Capital goods imports skyrocketed 114.1%, offsetting continued weakness in intermediate (-1.7%) and consumption goods (0.7%).
On a monthly basis, imports rose 14.1%, a sharp acceleration from 6.5% in March, defying typical seasonal patterns.
Trade Surplus Shrinks Sharply
Despite the export gains, Malaysia's trade surplus narrowed drastically to RM5.2 billion, far below KIBB's forecast of RM19.0 billion and the consensus estimate of RM14.7 billion. This was due to the significant rise in imports outpacing export growth.
Total trade surged 18.2% year-on-year, the highest in eight months, though MoM growth slowed to 4.8% from March's 11.6%.
Outlook: Short-Term Boost, Long-Term Risks
Despite the strong April figures, Kenanga has revised Malaysia's 2025 export growth forecast downward to 3.1% (from 5.0%), citing mounting risks in the second half of the year.
Key drivers include: A front-loading of exports in Q2 as businesses move to avoid potential US tariffs.
Ongoing strength in the global tech sector, particularly in AI and semiconductor-related products.
Possible trade diversion amid continued US-China decoupling.
However, risks abound, particularly from US policy uncertainty tied to the 90-day pause in President Trump's reciprocal tariff measures, which may end in July. The potential reimposition of tariffs could weigh on global trade, particularly in 2H25. A sluggish recovery in China also adds downside risk.
GDP Forecast Cut
Following weaker-than-expected Q1 GDP growth (4.4%), Kenanga has revised Malaysia's full-year 2025 GDP forecast to 4.3% from 4.8%. Still, the bank expects robust Q2 trade activity, as shown in April's numbers, to provide some buffer against anticipated headwinds in the latter half of the year.
'April's trade performance reflects strong global demand and pre-tariff frontloading. But sustainability remains in question as geopolitical and macroeconomic risks mount,' the report noted. Related
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