Malaysia's exports experienced a significant surge in April, driven by robust demand for electrical and electronic (E&E) products and record levels of re-exports, which contributed to a widening trade surplus according to UOB’s Global Economics & Markets Research team led by Julia Goh and Loke Siew Ting [1]. Despite this strong performance, UOB maintains a cautious outlook, keeping its 2026 export growth forecast at 2.5%, citing persistent geopolitical risks, ongoing Middle East supply disruptions, and the potential for renewed US tariff measures as key uncertainties [1].
The research notes that April's exceptional export results were largely due to swift business responses to supply chain distortions caused by the prolonged Middle East conflict and the closure of the Strait of Hormuz [1]. Year-to-date export growth as of April stands at 19.0%, but UOB remains conservative in its projections compared to Bank Negara Malaysia's (BNM) estimate of 8.6% for 2026 and 6.4% for 2025 [1].
The strong goods trade surplus, combined with an expected sustained services surplus, increases the likelihood of an upside surprise in Malaysia's current account surplus for the year. UOB estimates the surplus at MYR38.0 billion, while BNM projects MYR45.6 billion, with the actual figure for the first quarter of 2026 at MYR15.2 billion [1]. However, these forecasts are subject to revision depending on developments in the Middle East conflict and related global events [1].
The Malaysian government has issued warnings that manufacturers could face production stoppages as early as June due to supply disruptions from the Middle East conflict, with inventories running low and alternative sourcing facing delays or quality issues [1]. Geopolitical tensions remain high, with the risk of renewed US–Israel action on Iran and the possible reintroduction of US tariff measures after the expiry of Section 122 provisions and the temporary 10% global tariff in July [1]. US President Trump warned on May 19 that further action against Iran could occur if US terms are not met, highlighting the ongoing uncertainty despite a truce agreed to on April 8 [1].
CONCLUSION
Malaysia's strong export performance in April has boosted its trade and current account surpluses, but significant geopolitical risks and potential supply disruptions temper the outlook. UOB maintains a cautious stance, emphasizing that future forecasts depend on the resolution of Middle East tensions and US trade policy developments.