Malaysia’s trade data in February to show a dip, says RAM
RAM says industrial activity to shift to lower gear due to shorter working month
PETALING JAYA: RAM Ratings Services Bhd is expecting Malaysian trade data for February to show a dip on a year-on-year basis due to the shorter working month and the lunar festivities.
The Statistics Department would be releasing the trade data at noon today.
The rating agency’s economist Woon Khai Jhek expects the country’s exports to rise by 2% and imports by 0.6%. He said trade surplus would come in at RM9.8bil.
“Industrial activity is expected to shift to a lower gear amid the lunar new year, a key holiday in Malaysia and also for our largest trading partners (Singapore and China), compounded by an already short working month,” Woon said.
The market expects a median growth of 8% for exports in February versus January’s 17.9% and imports to rise by 7.1% from 11.6% the previous month. Economists expects a trade surplus of RM8.8bil for February.
Woon said there was evidence of some front-loading of shipments in January ahead of the holiday season, thereby moderating trade momentum in February.
“The dissimilar timing of the lunar new year in 2017, which had fallen in January as opposed to February this year, has also created a high-base effect for growth in February,” he noted, saying that exports and imports growth accelerated by a respective 26.6% and 27.7% in February last year from January exports of 13.6% and 16.1% respectively.
Woon does not see protective measures imposed on steel and aluminium products into the United States as having a major impact on Malaysia’s export performance given the 0.1% make up of steel and aluminium exports to the United States compared to overall 2017 exports.
But protectionist measures announced this year remains a key concern for Malaysia’s exports given its status as a small, open economy.
“Should the barriers become more numerous, especially as the US-China trade spat continues to escalate, the collective impact along with the distortion to the global supply chain could cause a deceleration or reversal of the current trade momentum,” Woon said.
He added that a direct risk would be the impact of the proposed US tariffs on China’s technology goods. Electrical and electronics products make up 36.7% of Malaysia’s overall exports last year.
Woon said there could be some relief for the export-oriented E&E subsectors over the longer term as supply chains readjust and trade makes its way more directly to the industrialised markets, possibly bypassing China as an intermediary.