Malaysia's exports to pick up to 2.3% in 2017

KUALA LUMPUR: Malaysia’s exports are expected to pick and expand at 2.3% in 2017 from the growth of 1.6% this year and 1.8% last year, according to RHB Research Institute as the global economy shows some signs of recovery.

The research house said on Friday, its positive outlook was based on the global merchandise trade activity which was bouncing back into a growth following 22 consecutive months of contraction, according to the World Trade Organisation (WTO). 

It also expected the current account surplus to improve in 2017 slightly to RM20.2bil or 1.6% of GDP, from an estimate of RM15.9bil or 1.3% of GDP in 2016.

In its comments on the September trade data, RHB Research said exports fell 3% on-year in September – which was sharper than a 2% decline based on a Bloomberg survey — following an expansion of +1.5% in August and compared with a drop of -5.5% in July.

“Stripping out currency factor and measured in US$ terms, exports grew for the second straight month, albeit slower in September,” it pointed out.

According to the official trade data released at midday, Malaysia’s September exports fell 3% to RM68.03bil, which was steeper than a survey of 2% forecasted.

The Statistics Department said on Friday that on a month-on-month basis, exports increased RM453mil (+0.7%) from RM67.6bil. However, in seasonally adjusted terms, exports dropped 0.9%.

RHB Research said the drop in exports was led by a slowdown in electrical & electronic (E&E) exports, while non-E&E and commodity exports declined during the month.

External demand was dragged by a slowdown in exports to the US and the Asean region while exports to the EU slipped into a decline.

As it stands, the exports of E&E products (36.6% share of total exports) eased to a growth of 0.3% on-year in September, from +3.0% in the previous month, and compared to -5.9% in July. 

This was on account of a slowdown in exports of electronic components & parts (largely semiconductor products) during the month. Similarly, exports of audio visual equipment and office machine & auto data processing equipment (largely computers) fell by a wider margin in September, compared to the previous month.

RHB Research said in the same vein, the exports of non-E&E products (51.5% share) slipped into a decline of 2.6% on-year in September, reversing from a growth of +1.5% in the previous month, and compared with-3.3% in July. 

This was mainly reflected in the slowdown in shipments of chemical products and optical and scientific equipment during the month. 

RHB Research said at the same time, shipments of wooden products fell by a wider margin, while shipments of machinery appliances slipped into a decline in September. As a whole, manufactured exports contracted by 1.3% y-o-y in September, following an expansion of +1.5% in August and compared to -3.9% in July.

Exports of commodity products (11.6% share) contracted by a wider margin of 13.4% y-o-y in September, from -3.0% in August, and compared to -12.3% in July. This was mainly reflected in the slowdown of palm oil shipments and exports of crude petroleum falling back into a decline during the month. 

These were, however, partly mitigated by a smaller magnitude of decline in LNG shipments in September.

“As for imports, they slipped into a decline of 0.1% on-year in September from a growth of 4.9% in August and compared to a contraction of 4.7% in July mainly attributed to a reversal in imports of capital and consumption goods into a contraction during the month.

“In terms of markets, the decline in September’s exports was led by a reversal in shipments to the EU into a contraction during the month, while shipments to the US grew by a slower pace. Likewise, shipments to Japan dropped by a wider margin in September, while export growth to the Asean region eased despite shipments to Singapore recording a stronger growth during the month. These were, however, partly offset by a smaller margin of contraction in shipments to China,” it said.

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