Kenanga Investment Bank has revised Malaysia’s 2026 export growth forecast sharply higher to 28.5% from 19%, with total exports now expected to surpass RM2 trillion for the year, following stronger-than-expected trade performance in August.
The research house said exports surged 45.5% year-on-year in August, accelerating from 38% in July and exceeding both market consensus of 38% and its own estimate of 44.4%.
The expansion was primarily driven by robust electrical and electronics (E&E) shipments and record growth in exports to the United States, reflecting sustained demand from artificial intelligence (AI)-related technology investments.
On a month-on-month basis, however, exports contracted 1.3%, reversing July’s 8.8% increase, which Kenanga attributed to a typical seasonal correction.
Manufacturing exports strengthened by 50.4% year-on-year in August, compared with 42.6% in July, while mining exports accelerated to 43.3% from 9.6%.
Agriculture exports, meanwhile, contracted 21.4%, reversing July’s 4.8% growth.
E&E exports remained the principal growth engine, surging 66.5%, their strongest performance in four months, compared with 51% in July.
The sector accounted for 48.4% of Malaysia’s total exports, slightly lower than the 49.4% recorded in the preceding month.
Commodity-linked exports delivered mixed performances, with liquefied natural gas shipments surging 51.8%, while crude petroleum and palm oil-related exports contracted 19.3% and 25%, respectively.
By destination, export growth to the US reached a record 139.1%, accelerating sharply from 81.5% in July.
Shipments to Singapore increased 61.5%, while exports to China and the European Union grew at slower rates of 22.9% and 20%, respectively.
Elsewhere in East Asia, exports to Taiwan surged 105.2%, followed by Hong Kong at 79.7%, Japan at 55.6% and South Korea at 9.4%.
Malaysia’s imports expanded 41.1% year-on-year in August, exceeding market expectations of 33.3% but coming slightly below Kenanga’s forecast of 41.8%.
The increase was supported by strong demand for intermediate and capital goods, suggesting continued manufacturing activity and investment expansion.
Intermediate goods imports surged 50.5%, their fastest growth in four years, compared with 40.8% in July.
Capital goods imports rose 37.4%, accelerating from 23.8% previously, while consumption goods imports contracted 1.6%.
By product category, E&E imports jumped 89.3%, while crude petroleum imports rebounded 87% from a 44.4% contraction in July.
Kenanga said Malaysia’s trade surplus widened to RM28.1 billion in August from RM22.5 billion in July, exceeding the market consensus of RM25.3 billion and its own projection of RM25.9 billion.
Total trade expanded 43.4% year-on-year, accelerating from July’s 37.2%, although it declined 2.9% on a monthly basis.
Kenanga said Malaysia’s cumulative export growth reached 31.2% in the first eight months of 2026, up from 29.2% during January to July, reflecting resilient external demand heading into the second half of the year.
The research house attributed its upward revision in export growth expectations to sustained E&E demand, particularly from AI-driven technology investments and new product launches.
Nevertheless, it expects export growth to moderate in the second half of 2026 as favourable base effects gradually diminish.
Kenanga cautioned that downside risks remain elevated, including uncertainty over US trade policies, weaker global growth amid higher energy prices, restrictive monetary conditions and persistent geopolitical tensions.
A potential slowdown in electronics demand following the AI-driven investment cycle and continued commodity price volatility could also affect Malaysia’s trade performance.
Despite these risks, the research house maintained its 2026 gross domestic product (GDP) growth forecast at 5.3%, compared with 5.2% in 2025.
It said strong external trade and expanding trade-related activities should continue supporting domestic economic activity and help offset global headwinds.
Kenanga added that sustained trade momentum could push second-half economic performance and full-year GDP growth above its current forecast.
