AmBank keeps export growth projection at 9%
PETALING JAYA: AmBank Group is maintaining its 2018 export projection at 9.0% year-on-year (y-o-y), but with limited upside growth.
Chief economist Anthony Dass said the projection was based on a healthy global growth of 3.6% , firm commodity prices and the favourable 12-month forward-looking business sentiment.
He said that the upside to export growth would be limited by the high base, adding that potential headwinds for trade would most likely come from the trade war.
Total trade surplus widened to a whopping RM14.7bil versus RM9.0bil in February, bringing the 2018 quarter-one surplus to RM33.4bil. The strong gain in trade surplus came on higher shipments of manufactured goods, while imports across the board registered declines.
Exports rebounded in March, growing 2.2% y-o-y from -2.0% y-o-y in February due to poor shipments as a result of the Lunar New Year break.
The electrical and electronics sector rose 8.7% y-o-y and crude petroleum 18.4% y-o-y, while the drag came from chemical and chemical products (-6.6% y-o-y), petroleum products (-8.6% y-o-y), palm oilbased products (-6.6% y-o-y), LNG (-13.3% y-o-y) and rubber products (-37.8% y-o-y).
Imports fell for the second month by 9.6% y-o-y from 2.8% y-o-y in February – the weakest growth since September 2009 when it shrank by 19.9% y-o-y.
The drag came from intermediate goods which accounted for 52.8% of total imports, down 14.4% y-o-y from 14.7% y-o-y in February, capital imports fell 30.5% y-o-y from 6.0% in February and consumption imports were lower by 12.4 y-o-y from 12.6% y-o-y in February.
Poor intermediate and capital imports imply modest spending on capital by manufacturers.
The manufacturing Purchasing Managers’ Index fell for the third month in April due to an increasing poor output and new export orders attributed to the softer demand from the domestic and export markets.
It fell to 48.6 in April from 49.5 in March.
Meanwhile, on the direction of the US Federal Reserve (Fed) rate hikes, Dass noted that the lack of wage pressure would likely be one of the key takeaways for the Fed in deciding the pace of the rate hikes going forward, although the Fed is on track to continue raising rates.
“Another important indicator is the participation rate that has dipped.
“We need some time to see how the tax cut plays out, as capital deepening would result in some productivity growth and bump up wages,” he said.