Malaysia’s exports still grow at a robust pace

  • Economy
  • Tuesday, 06 Jun 2017

Trade surplus: Export growth eased to 20.6 in April compared with 24.1 in the preceding month but the pace came in within the Bloomberg consensus estimate. – Bloomberg

Expansion due to strong E&E demand, higher commodity prices

PETALING JAYA: Malaysia’s exports continued to grow at a robust pace in April, thanks to a strong demand for electrical and electronic (E&E) products and higher commodity prices.

Although the country’s export growth had eased to 20.6% in April, compared with 24.1% in the preceding month, the pace came in within the Bloomberg consensus estimate.

With the steady growth in exports, Malaysia’s trade surplus increased to its highest value year-to-date at RM8.8bil in April. Imports during that month expanded at a slower pace of 24.7%, compared with 39.4% in March.

According to AllianceDBS Research chief economist Manokaran Mottain, the solid expansion in exports thus far indicates that Malaysia’s gross domestic product (GDP) growth in the second quarter of this year would still remain strong.

“In view of the expansion in exports, especially exports of manufactured goods, we reckon that the second-quarter GDP growth could still be strong,” Manokaran said in his report yesterday.

He expected the second-quarter GDP growth to range between 4.8% and 5.2% this year, pushing the full-year forecast to 4.8%.

“Export growth remains solid mainly due to the strong performance of E&E exports and the continued rebound in the oil and gas shipment, which contributed 7.9% and 2.1% to export growth, respectively. The double-digit export growth continues to be sustainable for the sixth consecutive month and has been the longest positive growth streak since January 2016,” Manokaran pointed out.

Noting that import growth in Malaysia thus far this year had been driven by the buying of capital goods, Manokaran said the trend could be indicative of robust infrastructure and investment projects in the country.

“One plausible explanation for the surge in capital imports could be to support the various infrastructure projects in the pipeline, as well as various investment projects coming into effect this year,” he explained.

Meanwhile, MIDF Research said global indicators suggested that Malaysia’s trade performance would remain strong through the remaining year.

“Business and consumer confidence in the developed and emerging economies indicates an optimistic outlook for the coming months,” MIDF Research said in its report.

The brokerage pointed to the expansion in China’s manufacturing and non-manufacturing purchasing manager’s indices in May and the University of Michigan’s consumer sentiment for the United States that rose to its four-month high of 97.1 in May as examples.

“Based on the current trends, we believe robust global demand will maintain and support Malaysia’s trade performance in the near term... we foresee Malaysia’s external trade continuing to record double-digit growth in May, given the sustained favourable external environment,” MIDF Research explained.

In addition, it said the risks of protectionism and geopolitical risks were receding, while major economies were undergoing a gradual economic recovery.

“An improvement in commodity prices will provide better prospects for Malaysia’s exports in 2017, especially for the commodities-based sector. Hence, we opine that our external trade performance will perform significantly better in 2017,” MIDF Research said.

It expected Malaysia’s export growth to average 8.5% in 2017, compared with only 1.1% last year.

RHB Research expected Malaysia’s export growth to average 10% this year.

“We are of the view that the recovery in global trade remains on track, indicated by the strong pick-up in exports across the region since late last year,” the brokerage said in its report.

“Given that the export performance for the first quarter of 2017 had exceeded expectations, we are forecasting exports to grow by 10% this year, from 1.1% in 2016, on account of a recovery in demand for commodity products, aided by higher prices, a pick-up in global semiconductor sales in late 2016, translating into higher E&E exports and an improving global trade outlook on the back of stronger global growth prospects,” it added.

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Business , exports , economy , GDP , trade surplus


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