External trade seen expanding at steady pace
But MIDF warns of risks from protectionist threat, geopolitical tension
PETALING JAYA: MIDF Research expects Malaysia’s external trade performance to expand at a steady pace for the rest of the year, on the back of a gradual rise in commodity prices.
Exports-wise, the research house is anticipating the country’s total exports to rise by an average of 9.3% in 2018, significantly lower than the 18.9% growth registered last year.
According to MIDF Research, the projected moderating pace of exports is mainly due to the unfavourable base effect and is in line with the anticipated slight slowdown in overall business performance.
“Protectionist threat as well as escalating geopolitical tension could be a headwind to global trade including Malaysia,” it said in a note.
On the country’s exports performance in March, MIDF Research said that it had surged to a new record-high at RM84.5bil.
This has filliped Malaysia’s trade balance in the first quarter of 2018 to an eight-year high, driven by solid demand from non-major markets such as Hong Kong and South Africa.
The Statistics Department reported that exports in March ticked up by 2.2% yearon-year (y-o-y), recovering from a 2% decline in exports a month earlier.
The improvement was underpinned by higher exports of electrical and electronic (E&E) products and crude petroleum.
The growth slightly exceeded Bloomberg’s survey of a 2% y-o-y increase.
E&E products, which accounted for 37.7% of total exports, increased by 8.7% to RM31.8bil in March.
Meanwhile, crude petroleum, which contributed 4.3% to total exports, rose by 18.4% to RM3.6bil.
However, the department pointed out that imports in March continued to fall by RM7.4bil or 9.6% to RM69.8bil, as compared with the Bloomberg forecast of a 3.2% decline.
In comparison, total imports decreased by 2.8% in February 2018.
The lower imports were primarily attributed to a decline in the purchase of intermediate goods, capital goods and consumption goods from other countries.
Intermediate goods, which constituted 52.8% of Malaysia’s total imports, dropped 14.4% in March.
As for the capital goods and consumption goods, the segments saw a decline in imports by 30.5% and 12.4% respectively.
As a result, the drop in total imports in March widened the trade surplus to RM14.7bil, the highest since October 2008.
Overall, for the first quarter, exports expanded by 5.8% to RM237.6bil while imports decreased by 0.8% to RM204.3bil.
On the country’s expected trade perfor- mance in April, Nomura Research said both export and import growth would improve as the technical base effects fade.
“Nonetheless, the slowdown in both exports and imports is consistent with our forecast of gross domestic product growth moderating to 5.5% in 2018 from 5.9% in 2017.In addition, financial-imbalance risks, as measured by our proprietary indicator, appear to be stabilising, which reduces the need for another rate hike this year,” said the research house.