Malaysia Exports to Drive Growth
Malaysia’s current account surplus is projected to grow in 2025, driven by continued robust exports and a resurgence in tourism. The surplus is forecasted to reach 1.9% of GDP, up from 1.7% in 2024, with exports continuing to outpace imports and strong tourism receipts that may push the services account into surplus.
The global technology upcycle and sustained demand for AI-related products will also support a favourable outlook for Malaysia’s export-driven industries. Meanwhile, despite falling short of the 2024 tourist arrival target of 27.3 million, 2025 arrivals are projected to climb to 31 million, ahead of Visit Malaysia Year 2026. A shift from a services deficit to a surplus, along with stronger goods surplus, is set to bolster the CA balance.
Another forecast expects the country’s CA surplus to further recover, albeit at a stronger pace — to RM41.3 billion or 2% of the GDP in 2025, with the global trade recovery and tech upcycle expected to continue supporting electrical and electronics exports, and strong tourist arrivals and higher travel receipts bolstering the services account.
CA surplus jumped to RM11.4 billion or 2.3% of gross domestic product in the fourth quarter of 2024 — the highest in three quarters — from RM2.2 billion in the previous quarter, based on the latest official figures. This was driven by goods surplus, which reached RM37.4 billion, the highest in seven quarters, supported by a 1.7% quarter-on-quarter increase in exports and a 3.5% quarter-on-quarter decline in imports.
Services account deficit also narrowed to its smallest since 2011, to -RM0.1b from -RM1.6 billion, largely driven by a reduction in the deficit for intellectual property charges and a stable travel account surplus — reflecting stronger tourist spending. This revival of tourism played a key role in Malaysia’s CA surplus and helped offset the widening deficits in both the primary and secondary income accounts.
Primary income deficit widened to RM20.2 billion in 4Q2024 from RM17 billion in 3Q2024, owing to higher repatriation of investment income by foreign investors back to their home countries, while secondary income deficit rose to RM 5.7 billion in 4Q2024 from RM2.4 billion in 3Q2024, amid higher transfers by foreign workers in Malaysia.
But downside risks persist, stemming from uncertainty surrounding major economies trade policies amid a potential trade war. There is also supply chain restructuring, as well as volatility in international commodity prices. The ringgit has held within the 4.40-4.50 range against the US dollar for the past three weeks, defying earlier projections of a weaker trajectory.
While delayed reciprocal tariffs offer temporary relief, their expected implementation could sustain demand for the US dollar as a safe haven, limiting the ringgit’s upside in the near term. Resilient domestic demand, fuelled by broad-based salary increases, may lead to higher imports of intermediate and capital goods, potentially tempering the overall surplus.
The recovery in tourism receipts is expected to remain supportive of Malaysia’s CA surplus in 2025. However, the surplus is expected to ease to 1.5% of GDP, as the potential impact of tariffs is likely to weigh on shipments in the second half of 2025. Shipments are projected to moderate in the latter part of 2025, as the impact of tariffs is likely to be seen over a period of several quarters amid global uncertainties and supply chain readjustments.
To date, tariffs have been announced on several countries, effective early 2025, as well as tariffs on steel and aluminium imports. More tariffs are expected following an increase in US trade deficit balance in 2024. Nonetheless, there could be a potential upside from better shipments if the global supply chain restructuring favours Malaysia. Overall, exports are projected to expand by 3.0% y-o-y in 2025.