Rising shipment: Container ships sit docked next to gantry cranes at Port Klang. The International Trade and Industry Ministry expects export growth of between 2% and 3% in 2015. — Bloomberg
PETALING JAYA: Malaysia’s exports will finish 2015 worst off than the previous year on weak external demand and tepid growth in major markets.
The Statistics Department will release the December and full-year trade data this Friday. Economists expect weak external demand to impact Malaysia’s exports, which rose 6.3% in November on a year-on-year basis compared to October’s 16.7%. So far, the survey shows a 4.9% median rise in exports for December and 4.1% gain in imports with RM10bil in trade surplus.
The International Trade and Industry Ministry expects export growth of between 2% and 3% in 2015. It also expects the trade surplus to narrow to between 2% and 3% in 2015 compared to the 16.6% jump in 2014, when the trade surplus came in at RM83.11bil.
In 2014, Malaysia recorded 6.4% rise in exports on higher demand for manufactured products compared to the previous year but RHB Research Inst Sdn Bhd chief Asean economist Peck Boon Soon said sub-par growth in developed markets would weigh on exports in 2015.
“The weaker ringgit will give some support but exports in general will not be robust,” he told StarBiz. Also, economists believe the prolonged weakness in the ringgit could lead to higher operational costs through imported inflation.
Peck said this year’s exports growth would again hinge on how the developed markets would perform. “We expect the eurozone and Japan to do better this year but this will be relative to their slow growth of the past year. We continue to see China slowing down,” he added. China posted a gross domestic product (GDP) growth of 6.9% last year, the slowest in 25 years. Its exports for the whole of last year was down 1.8% while imports declined 13.2%.
Manufactured goods exports, which has been the linchpin of exports the past two years on weak commodity prices, could see a slowdown this year. Apple Inc and Samsung Electronics Co have warned of a more challenging 2016 on more cautious demand for consumer electronics.
A further indication of the challenges that the local exports-reliant electrical and electronic firms faced came from the Semiconductor Industry Association’s (SIA) release on global chip revenue, which showed a marginal drop last year to US$335.2bil compared to the previous year. According to reports, 2014 was the best year yet for the industry. For December, chip sales was down 5.2% to US$27.6bil year-on-year and 4.4% from the previous month.
The SIA said in a statement that factors that limited more robust sales last year were softening demand, the strength of the dollar, and normal market trends and cyclicality. “In spite of these challenges, modest market growth is projected for 2016,” it added.
AmResearch Sdn Bhd economist Patricia Oh said China would remain an important factor in Malaysia’s trade performance. “Exports to China contracted in the early part of last year but rebounded especially towards the end,” she said. Malaysian exports to China totalled RM9.75bil in November year-on-year, constituting 14.2% of total exports.
Oh said although trade momentum has come off because of weaker global demand, there would be an improving trade balance with the fourth quarter relatively strong.
In a report from a month ago, she said the country’s healthy trade balance for the fourth quarter suggested GDP growth for the quarter would continue to be supported by inflows through net trades. Year-to-November, net trades had advanced by 17.3% to RM86.3bil compared to the same period the previous year.
Oh noted that in the October-November period, net trades had already amounted to RM22.4bil surpassing the surplus in the third quarter and was 85.5% higher compared to the same period the previous year.