Looking good

EXPORTS from Malaysia hit a record high of RM96.4bil for October, putting Malaysia at a good start for the final quarter’s GDP performance.

With net exports a factor in determining GDP growth, the record trade surplus of RM16.3bil also showed that conditions were robust in external trade.

Going by products that was exported, it was driven by electrical and electronic products, refined petroleum products, liquefied natural gas, crude petroleum and timber products. The good thing is that exports of oil and gas products got a lift in that month. Malaysia’s growth in the third quarter was hampered by the slump in oil and gas production along with that by the oil palm sector.

The bump in exports for October was also enough for the International Trade and Industry Ministry to be somewhat optimistic of export growth beating the target of 5% this year.

But one point raised by analysts when the October trade numbers were announced was the reason for the big bump in exports.

Economists have put down some of the growth to front loading by customers in China. The stocking up of goods from Malaysia was in anticipation of an escalation in trade tensions between China and the United States.

The US and China have agreed to a pause in the trade war for 90 days from Dec 1. The hope is that the extension can extended while both sides sit down to iron out issues that can avoid any further escalation in the trade war.

Should the trade war lead to a ceasefire, what will then be the impact on Malaysia’s exports? Yes, the frontloading may ease but the flipside is that a resumption of easier trade between the two largest economies in the world will have a positive impact on Malaysia’s trade.