PETALING JAYA: Malaysia’s exports in June saw a strong rebound as economies globally reopened, paving the way for a good uptick in economic activities in the second half of the year.
In June, exports bounced back to record an increase of 8.8% to RM82.9bil from a decline of 25.5% in May due to higher exports to China, the US and Hong Kong.
“Malaysia’s exports performance seems to have recovered from the impact of Covid-19 pandemic after registering a positive growth in the current month.
“In contrast, imports valued at RM62bil, declined by 5.6% year-on-year (y-o-y), resulting in a trade surplus of RM20.9bil, widened by 98.7% compared to June 2019. This was the largest trade surplus ever recorded thus far.
“The largest trade surplus was previously recorded in October 2019 with a value of RM17.3bil, ” said chief statistician Datuk Seri Mohd Uzir Mahidin. (pic below)
Meanwhile, Malaysia’s total trade for June stood at RM144.8bil, expanding by 2.2% compared to the same month last year.
The rebound came in contrast to estimates.
A Bloomberg survey had projected a 10% decline while analysts surveyed by Reuters were forecasting an 8% drop.
The main products which contributed to the expansion in exports were electrical and electronic products, rubber products, palm oil and palm oil-based agriculture products, optical and scientific equipment and machinery, equipment and parts.
“I think it’s commendable. We saw a big jump in exports during June with month-on-month gain by 32.3% after declining by 3.3% and 19.1% during May and April respectively.
“Such data indicates that the gradual reopening of the economy globally has benefitted the country’s international trade.
“Should the trend continue to hold up, we could expect respectable gains in terms of economic activities in the coming months, ” said Bank Islam chief economist Mohd Afzanizam Abdul Rashid.
However, Afzanizam noted that the present situation was still fluid and the movement control order may make a comeback if the rise in new Covid-19 cases becomes persistent.
“But development over vaccines in the US, whereby the testing has reached quite an advanced stage suggests that there is hope that the economic recovery might continue. It is a bit of a mixed feeling when there was intermittent rise in new cases. But data points, thus far, have been quite commendable, ” he added.
MIDF Research also expects improved performance in the second half of the year with better trade flows, but cautioned that rising protectionism may hinder growth.
“In line with our expectation, exports growth for 2Q20 averaged at -14.3% y-o-y, deteriorated from 1.1% y-o-y in 1Q20 as Malaysia had strict restrictions on economic activities due to the Covid-19 outbreak.
“Furthermore, most of the key countries globally also had firm lockdowns or restrictions during this period. For the 1H20, exports growth averaged at -6.8% y-o-y and moving forward, we foresee the performance to improve in 2H20.
“The expectation was constructed based on reopening of global economies in phases which will increase demand, resulting in better trade flows. The rebound in China’s economy added support to our expectation as the country is our largest trading partner hence recovery in their economy would mean demand for our products will continue to increase.
“Nevertheless, there are multiple downside risks to the estimate including a new wave of Covid-19 and rising protectionism as it will hinder most of the countries’ effort to restart their respective economies, ” it said.
MIDF maintained its forecast of exports growth at -8.3% y-o-y for this year.