KUALA LUMPUR: Malaysia's exports hit a record RM1.57 trillion in the first nine months of 2026, but an economist cautions that the headline growth figures alone do not reveal the underlying strength of the country's trade performance.
Exports rose 34 per cent year-on-year, supported by strong electrical and electronics (E&E) shipments and expanding demand in non-traditional markets.
However, Putra Business School professor Dr Ahmed Razman Abdul Latiff said more detailed data were needed to determine how much of the increase came from higher shipment volumes, prices or a shift towards higher-value products.
"We still need to look at the detailed volume and unit-value data to distinguish these effects and assess the underlying strength of export performance," he told Business Times.
Malaysia External Trade Development Corp (Matrade) today said total trade grew 30.1 per cent to RM2.91 trillion during the period, while imports increased 25.7 per cent to RM1.34 trillion.
This resulted in a trade surplus of RM232.38 billion.
E&E products remained the main export driver, contributing an increase of RM253.88 billion amid global demand linked to artificial intelligence (AI) and digital technology adoption.
Other contributors included petroleum products, optical and scientific equipment, machinery, equipment and parts, as well as liquefied natural gas.
Downstream palm oil-based manufactured products, particularly oleochemicals, also recorded double-digit export growth.
Meanwhile, automotive parts and accessories, pharmaceutical products, metal furniture and aerospace products posted positive growth.
These industries also feature significant participation from Malaysian small and medium enterprises (SMEs).
Ahmed Razman expects export growth to moderate in 2027 as global demand normalises and the high base of comparison makes further gains harder to achieve.
He said Malaysia could maintain a positive export trajectory if semiconductor demand, AI-related investment and E&E production remained strong.
However, weaker global economic growth, geopolitical tensions and trade restrictions could weigh on the outlook.
Economist Dr Geoffrey Williams expects the strong performance to continue into 2027, citing sustained external demand, higher export prices and increased volumes.
"The strong export demand is further evidence that the standard narrative of global headwinds, Middle East conflict and Trump tariffs is false," Williams said.
AI Demand Drives E&E Exports
The E&E sector remained a major contributor to export growth with exports increasing by RM253.88 billion amid strong global demand linked to AI.
Ahmed Razman said Malaysia's reliance on the semiconductor and AI investment cycle could expose exports to a slowdown in technology spending.
"Sustained investment in AI infrastructure, data centres and advanced computing supports demand for Malaysian electronics," he said.
However, weaker semiconductor demand or a slowdown in technology investment could significantly affect exports, he added.
Ahmed Razman said Malaysia should move towards higher-value semiconductor activities while diversifying its manufacturing base.
Williams identified technology, AI and semiconductors as key drivers alongside traditional sectors such as oil and gas and palm oil.
Beyond E&E, Matrade said petroleum products, optical and scientific equipment, machinery, equipment and parts as well as liquefied natural gas, were contributors to export growth.
Exports of downstream palm oil-based manufactured products, particularly oleochemicals, also recorded double-digit growth.
Other products recording positive growth included automotive parts and accessories, pharmaceutical products, metal furniture and aerospace products, which feature substantial participation from Malaysian SMEs.
Higher Imports Reflect Stronger Activity
The 25.7 per cent increase in imports could indicate stronger manufacturing activity and investment although their composition needs further examination.
Ahmed Razman said the increase suggested stronger demand for intermediate inputs, machinery and capital equipment.
"It also reflects Malaysia's deep integration into global supply chains, where imported components are processed or assembled before being exported," he added.
However, he said imports should be assessed by category to distinguish productive investment from consumption and inventory accumulation.
Williams said imports reflected stronger domestic activity including goods brought into Malaysia for re-export and purchases by consumers.
Market Diversification Continues
Exports to non-traditional markets across Africa, Central Asia, South Asia and Latin America rose 21.5 per cent to RM136.36 billion in the first nine months of 2026.
Exports to Namibia surged 426.1 per cent, while shipments to South Africa increased 101 per cent, Libya 79.3 per cent, Angola 55.6 per cent and Brazil 41 per cent.
Ahmed Razman said the growth was encouraging but insufficient to substantially reduce Malaysia's reliance on established trading partners.
He said Malaysia should expand market access through trade agreements, stronger business networks and targeted export promotion.
"Crucially, diversification must involve a broader range of products and industries, not simply more destinations for the same exports," he said.
Williams said expanding into non-traditional markets would gradually reduce Malaysia's reliance on established trading partners.
Malaysia's free trade agreement (FTA) partners accounted for RM986.38 billion or 62.8 per cent of total exports with shipments to these markets growing 25.8 per cent.
Exports to 21 of Malaysia's 24 FTA partners increased, led by Mexico at 52.1 per cent, Vietnam at 44.9 per cent, the United Kingdom at 41.1 per cent and Thailand at 32.3 per cent.
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