Exports beat market forecast
Double-digit rise is ninth straight month of growth
“It looks like the external sector for Malaysia has been positive and a weaker ringgit may have helped support the growth.” Mohd Afzanizam Abdul Rachid
PETALING JAYA: Malaysia’s exports growth in April beat market predictions, with exports recording a double-digit gain for the ninth straight month.
The Statistics Department announced yesterday that exports surged 20.7% year-onyear (y-o-y) to Rm127.5bil in April 2022, surpassing the Bloomberg consensus’ growth forecast of 19.9%.
Chief Statistician Datuk Seri Mohd Uzir Mahidin said the expansion was driven by both domestic exports and re-exports. Domestic exports, valued at Rm103.4bil and contributing 81.1% to total exports, grew 21.7% y-o-y.
Meanwhile, re-exports registered Rm24.1bil, increasing by 16.8%. A total of 191 out of 255 commodity groups in exports showed increases in April, as compared to the same month of the previous year.
April 2022’s export growth was primarily buoyed by higher shipments of electrical and electronics (E&E) and commodity-based products such as crude oil, liquefied natural gas, palm oil, palm oil-based products and manufactures of metal.
Consistent with the export performance, Malaysia’s imports in April 2022 registered a double-digit growth of 22% from Rm85.2bil to Rm103.9bil.
It is worth noting that imports growth has outpaced exports growth for four consecutive months.
The Statistics Department said that a total of 176 out of 258 commodity groups posted positive growth in April 2022.
Meanwhile, the country’s overall trade increased by 21.3% from Rm190.8bil in the preceding year to Rm231.4bil in April 2022.
“Total trade registered a strong double-digit growth for the 15th consecutive month since February 2021.
“Trade balance registered a surplus of Rm23.5bil, growing by 15.7% in April 2022,” according to the department in a statement.
Commenting on the performance, Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said that the double-digit y-o-y expansion in exports suggested that the weakening ringgit may have benefited Malaysian exporters.
“On average, total exports grew 21.7% for the first four months of 2022 from 29.3% during the same period last year.
“It looks like the external sector for Malaysia has been positive and a weaker ringgit may have helped support the growth, as export prices have become quite competitive following the depreciation of the ringgit,” he added.
In a note issued yesterday, UOB Global Economics and Markets Research noted that Malaysia’s exports growth at 20.7% y-o-y in April had beaten its estimate of 19.5%.
“All three export sectors (manufactured goods, agriculture goods and mining goods) sustained their double-digit annual gains last month. Stronger demand from G3 countries and China including Hong Kong were observed, thus cushioning a moderation in exports to the Asean region,” it said.
Looking ahead, the research house said it maintained its cautiously optimistic view on Malaysia’s overall trade outlook with a fullyear export growth projection of 8% for this year.
While Malaysia’s trade performance in April was commendable on a y-o-y basis, the month-on-month (m-o-m) numbers have raised concerns on the outlook.
With exports shrinking faster than the drop in imports, Malaysia’s trade surplus in April narrowed significantly on a m-o-m basis.
For a trade-reliant country like Malaysia, where the trade value was equivalent to 116% of its gross domestic product in 2020, a contraction in exports, imports and trade surplus have raised doubts on the country’s economic recovery.
In comparison to March 2022, Malaysia’s trade surplus in April declined by 11.6% m-om, after exports and imports fell by 3.1% m-o-m and 0.9% m-o-m respectively last month.
Meanwhile, the country’s total trade also declined by 2.1% against March.
Speaking with Starbiz, Malaysia University of Science and Technology professor Geoffrey Williams warned that the contractions could get worse, moving forward.
This is considering all major markets such as China, Europe and the United States have downgraded growth forecasts for 2022.
With slower economic growth in these markets, which are also Malaysia’s key export destinations, Malaysia’s export sales would be harmed, according to Williams.
“There is concern about net exports, which according to Bank Negara, fell 26.5% in the first quarter of 2022 compared to the year earlier.
“The contribution to growth was negative 1.5%. So it shows that we cannot be so reliant on trade to contribute to overall growth as in the official forecasts,” he said.
However, Bank Islam’s Mohd Afzanizam disagreed with Williams. He said the contraction was no cause for alarm.
“Historically, the m-o-m performance for April has been smaller or in contraction.
“I would say that this could be a characteristic of seasonal factors,” he told Starbiz.
For the month of April in 2015 to 2018, exports had consistently contracted, according to Mohd Afzanizam.
In April 2019, exports grew marginally by 0.6% m-o-m and contracted again by 19.1% m-o-m in April 2020 due to the closure of international borders following the movement control order.
In April 2021, exports rebounded slightly by 0.6% m-o-m.
Looking ahead, Williams said that net exports would not be a key support for Malaysia’s growth, even with the depreciation of the ringgit.
“We can only hope they will not drag too much.
“The weaker ringgit makes exports cheaper but also makes imports more expensive. So it’s a balanced situation,” he added.