Exports slow unexpectedly in September

Strong note: The recent trade performance is also likely impacted by the strengthening of the ringgit.

PETALING JAYA: Malaysia’s exports slowed unexpectedly in September due to weaker exports of crude and refined petroleum products and electric and electronics (E&E).

Exports fell 0.3% in September from a year earlier, well below the 7.6% growth forecast in a Reuters poll of economists.

Imports for the month grew 10.9% year-on-year (y-o-y), and was weaker than the 21.7% increase analysts had forecast. The country, nevertheless, recorded a trade surplus of RM13.2bil in the month.

According to a report by MIDF Research, the country’s exports to the top two markets – namely Singapore and China – had fallen by 1.2% y-o-y and 2.9% y-o-y, respectively.

Exports to Japan and India also contracted but exports to the United States maintained its positive growth since January 2024.

It had grown moderately at 9.1% in September attributable to the increased demand for manufactured goods especially E&E, manufactured of metal and rubber products.

The research house said the weaker import figure for the month reflected the slower rise in imports of intermediate and consumption goods.

The significant rise in capital goods imports at 56.3% was driven mainly by equipment purchases for data centre installations. A substantial portion of the growth also came from increased imports of E&E products, while mining goods imports saw a strong increase by 23.2%, largely due to higher crude petroleum purchases.

MIDF Research said Malaysia’s export growth in 2024 has been shaped by both price and volume changes.

Recent data showed export prices and volumes rising, with prices contributing more to growth this year.

Import growth, on the other hand, has been largely driven by higher demand, as volume increases played a bigger role than price changes.

Hence, the research house expects that export growth may be affected by moderating prices, especially with the recent decline in crude oil prices, while import trends are expected to continue reflecting shifts in demand volume rather than price movements.MIDF Research has maintained its projections for Malaysia goods exports and imports to recover and rebound to 5.2% and 11.2% respectively for 2024.

“We still expect the recovery in the E&E trade and increased demand for other export products to support export growth in the coming months. Meanwhile, imports will continue to increase in line with growing domestic demand,” it stated.

It added that increased investment activities, among others, may translate to higher imports of capital goods.

“Nevertheless, we remain cautious that Malaysia’s external trade activity may be negatively impacted by the escalation in geopolitical conflict, weak final demand from major economies and slowdown in global production and trade activities,” MIDF Research added.

Although E&E exports weakened again in September, trade recovery will continue in the coming months given the growing global demand for semiconductors and E&E products.

“Apart from the correction in commodity prices, we believe recent trade performance was also impacted by the strengthening of the ringgit. In dollar terms, the country’s exports expanded by 9.5% y-o-y, growing for the sixth consecutive month,” it noted.