M’sia’s trade exceeds RM2 trillion in 2023

Geopolitical uncertainties such as the USChina, Russia-Ukraine and Middle East conflicts also took a toll on the global economy and dampened demand for Malaysian products while high global inflation eroded consumer purchasing power in importing countries.

Miti

KUCHING: Despite the challenging global economic landscape, Malaysia’s trade last year exceeded the RM2 trillion mark for the third consecutive year and has sustained its surplus trend for 26 successive years since 1998, said the Ministry of Investment, Trade and Industry (Miti).

In a press statement, it explained that exports surpassed RM1 trillion for the third year in a row and achieved 82.4 per cent of the target set for 2025 under the Mid-Term Review of the Twelfth Malaysia Plan (12MP).

Meanwhile, imports posted another milestone by crossing RM1 trillion mark for the second time.

The nation’s trade performance also realised the forecast published in the Economic Outlook 2024 by the Ministry of Finance (MOF) with trade, exports and imports achieving 100.1 per cent, 99.7 per cent and 100.5 per cent of the projection, respectively.

Nevertheless, these figures were still weaker than the previous year as Malaysia’s RM2.637 trillion trade in 2023 was a decline by 7.3 per cent compared to 2022 in tandem with slower global demand, lower commodity prices, geopolitical uncertainties, high inflation rate, downcycle in the semiconductor sector and high base effect last year.

“Weak commodity prices continued to affect trade performance, notably for crude palm oil, crude petroleum and liquefied natural gas (LNG).

“Geopolitical uncertainties such as the US-China, RussiaUkraine and Middle East conflicts also took a toll on the global economy and dampened demand for Malaysian products while high global inflation eroded consumer purchasing power in importing countries,” it explained.

It also pointed out that the challenging global economic landscape in 2023 has adversely impacted international trade including Malaysia’s trade performance which experienced a contraction.

This was in line with other key trading partners notably China, Taiwan RoC, the Republic of Korea (ROK) and Indonesia which also posted negative trade growth.

Despite the weak export performance, year 2023 witnessed the growth of Malaysia’s exports to emerging markets notably Kenya, Brazil, Nigeria, Tanzania, Yemen, Morocco, Puerto Rico, Namibia and Kyrgyzstan.

Exports to selected Free Trade Agreement (FTA) markets recorded expansion namely the ROK, Australia, Mexico, Türkiye and New Zealand despite overall exports to FTA partners registered decreases. Coupled with improvement in global trade,

“FTAs notably the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific

Partnership (CPTPP) are expected to add to the positive outlook of Malaysia’s external trade.

“In addition, the New Industrial Master Plan 2030 (NIMP 2030) emphasises on enhancing utilisation of FTAs among Malaysian exporters,” it highlighted

Malaysia’s exports in 2023 was also dominated by electrical and electronic (E&E) products which accounted for 40.4 per cent share of total exports, recording a contraction compared to the previous year.

“Despite the downcycle in global semiconductor sector, the country’s exports of semiconductor devices and integrated circuits (ICs) attained positive growth,” Miti said.

The Asean region also remained a key trading partner for Malaysia, taking up 27.3 per

cent of Malaysia’s total trade in 2023. Trade with Asean amounted to RM720.66 billion, a decrease of 6.5 per cent compared to last year.

“Exports to Asean dipped by 7.2 per cent to RM420.3 billion following lesser demand for E&E products, petroleum products, chemicals and chemical products as well as palm oil and palm oilbased agriculture products.

“Nonetheless, the contraction was softened by positive export growth of non-metallic mineral products, crude petroleum, processed food and jewellery,” it added.

In 2023, China also continued to be Malaysia’s largest trading partner for 15 consecutive years since 2009, taking up 17.1 per cent share of Malaysia’s total trade. Trade with China fell by 7.3 per cent to RM450.84 billion from the preceding year.

China was also Malaysia’s largest import source, absorbing 21.3 per cent share of total imports. Imports from China declined by 6.2 per cent to RM258.63 billion with major imports comprising E&E

products, machinery, equipment and parts as well as chemicals and chemical products.

Meanwhile, Miti noted that Malaysia has signed 16 regional and bilateral FTAs, allowing exports to enjoy preferential market access with lower tariffs.

In 2023, trade with FTA partners was valued at RM1.776 trillion or 67.4 per cent of Malaysia’s total trade, decreased by 7.2 per cent as opposed to 2022.

Malaysia also saw several emerging markets registered export expansion, notably Kenya, Brazil, Nigeria, Tanzania, Yemen, Morocco, Puerto Rico, Namibia and Kyrgyzstan.

On Malaysia’s trade outlook in 2024, the ministry said Malaysia’s trade performance is expected to recover in year 2024 in tandem with the outlook by the World Trade Organization (WTO) which anticipated global trade to grow by 3.3 per cent.

“In 2024, Malaysia’s trade is expected to grow by five per cent while exports and imports are estimated to increase by 5.1 per cent and 4.9 per cent, respectively

based on the Economic Outlook 2024 published by the MOF,” it said.

Nevertheless, it cautioned that global trade might still be impacted by key factors such as global uncertainties arising from prolonged geopolitical tensions, exporters’ ability and readiness in meeting environmental, social and governance (ESG) market demands, disruption in global supply chains and uncertainties in commodity prices.

Additionally, 2024 will also be a year of significant political changes, with major elections scheduled to take place in our key trading partners notably the US, the ROK, Indonesia and India which could have a significant impact on trade and international relations.

“Moving forward, the government will continue to enhance the promotion of international trade to reinforce business resilience and sustain economic growth momentum. This will be supported by initiatives under the 12MP, the National Trade Blueprint (NTBp) and the NIMP 2030,” Miti said.