Slower export growth in August, says RAM Ratings

March exports surges past RM80b for first time

KUALA LUMPUR: RAM Ratings expects Malaysia’s export growth to expand at a more moderate pace of 20% in August, which is in line with a Bloomberg survey.

It said on Thursday the moderate growth would be amid the dissipation of the low-base effects and seasonal boost for domestic industrial output, which had driven July's 30.9% expansion. 

“Export growth in August is anticipated to keep being driven by demand from China and Singapore,” it said. 

RAM Ratings said in line with the weaker exports, it anticipated import growth to be 15.4% --- which is lower than Bloomberg's survey of 20.9%.

It attributed the slower exports due to the strong correlation as a key input factor for exported goods amid Malaysia’s close linkage with the global value chain. 

Moreover, domestic restocking cycles are envisaged to decelerate after the surge at the start of this year. 

As such, import demand may be dampened as the need to build up inventories reduces with respect to the moderating pace of demand for exports. 

“In this scenario, the trade surplus is projected to come in at RM13.1 billion in August,” it said.

RAM Ratings said the growth of imports and exports was envisaged to keep expanding at a healthy pace. 

“This will be facilitated by the resilient pace of industrial activity and upbeat global demand, although the momentum will likely moderate towards the end of this year, as the higher-base effects from 2H 2016 kick in. 

“Furthermore, the slower pace of new electronic orders by key export markets such as Japan and the US also suggests a further moderation in export growth in the coming months,” it said.