Malaysia’s trade to sustain positive growth momentum throughout 2018
KUALA LUMPUR: Malaysia’s trade has been projected to sustain positive growth momentum throughout 2018, analysts say, supported by a steadier global economy, higher oil price and buoyant global semiconductor demand.
According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research) in a ‘Malaysia External Trade’ report, despite growth momentum in trade easing somewhat in the first two months of the fourth quarter of 2017 (4Q17), it largely remains resilient and stays at an elevated level of double digit growth.
Kenanga Research expected exports to grow at a more modest pace in December in view of moderating trend in global semiconductor demand, with overall exports growth tapering off in 4Q17.
In consideration of the respectable year-to-date growth of 20.4 per cent, the research arm maintained its full year gross exports forecast for 2017 at 21.6 per cent, compared to 1.2 per cent in 2016.
“Going into 2018, while we maintain optimistic outlook for the year, it is important to note that the market is still facing considerable risks that could weigh on the upward momentum in exports,” Kenanga Research said.
“We identify several downside risks on exports growth, including unfavourable high base effect, stronger ringgit, downward oil price movements, softening demand from China induced by tighter credit, increased geopolitical tensions, and monetary policy uncertainty in major economies.”
Nonetheless, Kenanga Research continued to believe that the extent of a possible slower growth trend would be modest at best.
For 2018, the research arm’s preliminary assessment projected total exports growth to likely moderate to seven per cent to 10 per cent.
“Similar to our previous view, despite the impending risk to growth in 2018, we see sustained strength in Malaysia trade growth momentum albeit moderating, supported by a steadier global economy, higher oil price and positive global semiconductor demand at least for the next six months.
“Furthermore, we expect domestic demand, benefitting from the trickle-down effect of the solid exports performance last year, would continue to support Malaysia’s GDP growth this year.”
Hence, Kenanga Research maintained its GDP forecast of 5.1 per cent in 2018, compared to 5.8 per cent in 2017, well within reasonable range of its potential growth trend.