RAM: Malaysia’s exports growth to maintain double-digit increase

KUCHING: RAM Ratings (RAM) expects Malaysia’s export growth to maintain a double-digit increase in September, albeit at a slower pace of 15.9 per cent, largely premised on expectations of a further tapering in growth of exports to China and Singapore.

In a press statement, it said that this was in line with the projected moderation in restocking activities for electronic goods (one of the main drivers of export growth) once inventory requirements have been fulfilled.

“In line with the above, import growthisalsoestimatedtomoderate to 18.2 per cent given its strong correlation as a key input factor for exported goods amid Malaysia’s close linkage with the global value chain. In this scenario, the trade surplus is projected to come in at RM7.6 billion in September.

“Imports of consumption goods have also been trending upwards since the beginning of this year, as it spiked to 21.9 per cent in July 2017, the highest it has been in 16 months, before moderating to 17.8 per cent the following month.

“This is in line with our expectation of the continued resilience of private consumption, particularlydemandfornecessities, as growth has been mainly driven by such consumer items,” it said.

With the normalisation of labour conditions and wage growth, underpinned by favourable demographics, private consumption is anticipated to strengthen, thereby feeding the robust expansion of imported consumption goods, the ratings agency noted.

“Moving forward, imports and exports are envisaged to keep expanding at a healthy pace.

“This will be facilitated by buoyant industrial activity and upbeat global demand, although it will increase more moderately through the rest of this year, as indicated by the recent softening amid the higher-base effects from the second half 2016,” said RAM.