In its annual report released on Wednesday it also said Malaysia' exports and current account surplus were expected to remain firm in 2018 .
Bank Negara said the external sector was projected to remain resilient amid further strengthening in the global economy in 2018.
“Malaysia’s export performance will be supported by favourable demand from major trading partners, continued expansion in the global technology upcycle and broadly sustained commodity prices,” it said.
“Gross exports and gross imports are projected to grow at above-average trends, albeit at a more sustainable pace of 8.4% and 8.6%, respectively,” it said.
Bank Negara said amid continued strength in trade activity, the goods surplus of the current account is expected to increase.
Deficits in the services and income accounts, however, will continue to weigh on the current account balance.
Exports would benefit from favourable external demand, it said, adding the country's gross export growth will be supported by demand from key trading partners, such as the US, EU and regional economies.
Underpinning the firm outlook was the broad-based improvement in forward looking indicators such as business confidence indices of major trading partners, manufacturing production indices in the advanced and regional economies and the US Technology Pulse index suggest continued strength of manufactured exports in the early quarters of 2018.
Also continued investments in the advanced economies will lend support to the global electronics upcycle as the boost from smartphone demand eases.
“Malaysia’s semiconductor exports (2017: 19.0% share of gross exports) will strongly benefit from the increasing pervasiveness of semiconductors used in automobiles and consumer electronics such as connected devices and smart appliances.
Insights from the bank’s regional economic surveillance suggest that exports of semiconductors for the automotive market is likely to remain firm on account of rising semiconductor content per vehicle and growing demand for advanced vehicle safety, infotainment and comfort systems.
For non-electrical and electronic (E&E) exports such as petroleum, chemical and metal products, growth will be supported by steady demand from most regional countries.
It said China’s (2017: 13.5% share of gross exports) rebalancing efforts, however, may weigh down export of these products.
Bank Negara said capacity expansions particularly in the export-oriented manufacturing and mining sectors were also expected to support export growth.
It pointed out the several approved investments would commence, including the relocation of a sizeable E&E production line to Malaysia, which will contribute to the exports of high-value wireless communication chips.
Firms in the resource-based manufacturing industries, such as petrochemicals and rubber gloves, have announced operationalisation of new manufacturing plants.
The anticipated pickup in crude oil and LNG production from existing and recently commenced facilities will also provide some support to commodity export volume growth.
Arising from these developments, growth in Malaysia’s manufacturing exports is expected to remain at above-average trend, although the pace is expected to ease.
Imports of intermediate inputs will continue to expand to cater for export-oriented manufacturing production.
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