22/04/2026

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WEDNESDAY | APR 22, 2026

Asean+3’s growth expected to ease on energy, tariff risks

Ű BY JOHN GILBERT sunbiz@thesundaily.com

KUALA LUMPUR: Growth in Asean+3 (Asean members plus China, Japan, and South Korea) is expected to ease to around 4.0% in both 2026 and 2027, with inflation likely to edge higher as elevated energy prices feed through the economy. Asean+3 Macroeconomic Research Office (Amro) group head and lead economist Allen Ng, in his presentation, said domestic demand should remain the main pillar of expansion, but external demand is set to soften under the weight of higher US tariffs, while ongoing tensions in the Middle East add further inflationary pressure. He said the overall outlook is skewed to the downside, as a prolonged conflict could keep energy costs high and ripple across the broader economy. Further, the current artificial intelligence driven technology cycle – while a key support for exports – may prove uneven, and lingering uncertainty over global trade policies continues to cloud the region’s prospects. Ng noted that the ongoing Middle East conflict is shaping up to be the most serious energy supply disruption to hit the region in decades, with prices already surging and the potential impact far exceeding the 2022 Russia Ukraine crisis. “The scale is significant, with affected global oil supply estimated to be four times larger, and – unlike in 2022 – the disruption to the Strait of Hormuz directly threatens the region’s own oil and LNG supply routes. “How long the conflict lasts will be critical: a prolonged episode could see rising costs spill over from energy into industrial inputs, logistics, food and services. “Even so, Asean+3 is better prepared than in the past, with lower energy intensity, more diversified power sources, and faster adoption of electric vehicles helping to cushion the blow,” he said at the SC-AMRO Regional Economic Outlook Seminar entitled “Asean at a Crossroads” yesterday. He also noted that Asean+3 headed into 2026 in better shape than many had expected after last year’s US tariff shock. Asean+3 appears set to maintain solid growth, but much will depend on whether the current tech-driven export strength holds up and how the region navigates ongoing global trade uncer-tainties, Ng said. In his presentation, he said the region’s KUALA LUMPUR: Malaysia is moving to shield its export sector from escalating geopolitical tensions and global trade disruptions, even as first-quarter performance remained resilient. Malaysia External Trade Development Corporation (Matrade) said exports rose 12.7% year-on-year to RM426.53 billion in Q1 2026, outpacing import growth of 7.7%, while the trade surplus surged 54% to RM63.22 billion. Matrade chairman Datuk Seri Reezal Merican Naina Merican said the strong performance was driven largely by electrical and electronics (E&E), alongside optics, scientific equipment and medical devices, supported by global demand for semiconductors and artificial intelligence related technologies. “Export is the most important for us, we are mandated to look into external trade,” he said, adding that Malaysia is shifting from reacting to crises towards proactive facilitation. Reezal was speaking at Matrade’s update on Malaysia’s trade performance in the first quarter of 2026 yesterday. Ű BY DEEPALAKSHMI MANICKAM sunbiz@thesundaily.com

there is also opportunity for regional synergy. Capital markets must reflect these realities. They must be deep enough to absorb global shocks, yet agile enough to fund the ‘deep tech’ and ‘green tech’ innovations that will define the next decade.” Mohammad Faiz said from the SC’s perspective, the capital market is not just a platform for capital raising, it is the primary engine for structural transformation. “Regionally, our strategy is deeply intertwined with the ACMF Action Plan 2026 2030, a roadmap designed to transform Asean into a more resilient, integrated and com petitive investment hub. “One of its key priorities is to promote Asean as an asset class, with various offerings serving the diverse needs of the Asean member states, and anchored on deeper regional integration. “In this regard, Malaysia stands ready to champion and facilitate initiatives that contribute to this cause. Given evolving global and regional dynamics, Malaysia’s strategic location and institutional strength will position it as a regional trade hub within Asean and beyond,” Mohammad Faiz said. The action plan’s significance lies in its forward-looking approach, bridging the gap between diverse national economies while channelling global capital toward long-term inclusive growth that benefits everyone, he said. “Our objective is to ensure that the Malaysian capital market remains resilient, competitive, and fit for purpose – able to support economic growth while safeguarding stability in an increasingly complex environment. “This includes building a capital market that is vibrant and drives economic prosperity, is inclusive for all Malaysians, supports our national sustainability goals, and serves as a gateway to regional opportunities. “Looking ahead, the next phase of Malaysia’s capital market growth will depend on our ability to capture opportunities in one of the world’s fastest-growing regions,” Mohammad Faiz said. identifying disruptions in real time. These offices now focus on market access, competitiveness and supply chain enablers, including identifying alternative ports and logistics routes to bypass chokepoints such as the Red Sea. The agency has also launched an artificial intelligence-powered tool, the Matrade Interactive Virtual Assistant, to provide exporters with round the-clock support and market insights. Alongside this, several task forces have been established to coordinate responses, including a Trade Resilience Taskforce involving industry groups such as the Federation of Malaysian Manufacturers and the National Chamber of Commerce and Industry Malaysia. Matrade CEO Abu Bakar Yusof said Malaysia remains committed to sustaining export growth despite global uncertainties, noting that the country improved its global export ranking to 23rd last year. “We are not looking back, we will continue to push our exports and sustain growth,” he said. For 2026, Matrade is projecting a modest trade and export growth of between 3% and 5%, although this outlook is subject to downside risks.

o Domestic demand should remain core pillar of expansion but external demand set to soften, says research office

From left: Ng (moderator), Khazanah Research Institute chairman Dr Nungsari Ahmad Radhi, Deputy Finance Minister Liew Chin Tong and CGS International Group CEO Carol Fong during a panel discussion on ’Deepening Asean Integration - From Trade to Finance’ at the SC-AMRI Regional Economic Outlook Seminar in Kuala Lumpur yesterday. – BERNAMAPIC

chairman Datuk Mohammad Faiz Azmi said the world is operating in an environment that has become significantly more complex, marked by unprecedented shocks. “We see this in the convergence of geopolitical tensions, fragmented trade policies, the disruptive potential of generative AI, and accelerating climate crises. Volatility has become a persistent feature rather than an episodic one. “However, where there is fragmentation, Exports to several emerging markets have risen sharply, including Sudan, Uganda and Bangladesh, reflecting a broader push to tap new demand centres. At the same time, Malaysia is strengthening trade ties within existing frameworks, with exports to free trade agreement partners growing 10.4% over recent years. Asean remains a key pillar, accounting for about 25% of Malaysia’s total trade, with stronger growth now seen in newer markets such as Cambodia and Myanmar. However, exposure to conflict-affected regions remains limited. Trade with West Asia accounts for just 2.7% of total trade, although sectors such as palm oil, petroleum and jewellery are already seeing some contraction. Reezal said geopolitical tensions are also creating new opportunities, as supply gaps emerge in certain markets. “Every crisis, there are opportunities for us,” he said, pointing to shifts in sourcing patterns and consumer preferences in affected regions. To respond faster, Matrade has transformed its 47 overseas offices into “frontline intelligence hubs” tasked with monitoring trade flows and

economy grew 4.3% in 2025, beating earlier forecasts, helped by steady exports, especially from strong demand for AI-related semiconductors, and lower-than-feared tariff impacts. Consumers kept spending as job markets remained stable, and inflation stayed low, while investment picked up on the back of continued foreign inflows. Closer trade and investment ties within the region also helped cushion external pressures. Securities Commission Malaysia (SC) Despite the upbeat start, Matrade warned that underlying pressures are building, with 90.5% of manufacturers already affected by global disruptions, particularly rising logistics costs and raw material shortages. The full impact is expected to be felt from the second quarter onwards. Operating costs have risen between 10% and 30% for more than half of businesses, driven by supply chain disruptions, higher freight charges and limited access to raw materials. To cushion the impact, Matrade has rolled out a strategic mitigation plan centred on diversification and real-time trade intelligence. Reezal said Malaysia is pursuing a two pronged diversification strategy, expanding export destinations while reducing reliance on single sourcing markets. This has led to a surge in trade with non traditional and emerging markets, particularly in Africa, Central Asia and South America, as exporters shift focus away from conflict-prone regions. “We give more concentration to non-conflict zones,” he said, noting that regions such as Africa and Central Asia recorded a combined growth of 13.2%.

Malaysia defends trade momentum as exporters brace for global shocks