Exports likely to grow at faster pace
MALAYSIA’S external position is expected to improve next year, mainly supported by strengthening global growth and trade.
According to the Economic Report 2016/17, gross exports were expected to grow at a faster pace of 2.7 per cent from 1.1 per cent this year, spearheaded by a rebound in exports of commodities and continued demand for electrical and electronics products.
Gross imports were anticipated to expand further by 3.4 per cent next year compared with 1.3 per cent this year, driven by acceleration in imports of capital goods following new and ongoing infrastructure projects.
“Furthermore, imports of intermediate goods are expected to rise in tandem with higher manufacturing activities.
Trade surplus is projected at RM88.3 billion from RM91.4 billion this year,” the report said.
During the first eight months of this year, total trade rebounded 0.9 per cent to RM948.4 billion due to sustained global trade.
Gross exports and imports rebounded 0.9 per cent, respectively, resulting in a trade surplus of RM52.2 billion.
“Export growth was supported by higher demand for manufactured and agriculture goods. Growth in imports was attributed to increasing demand for capital and consumption goods”.
For the year, gross exports and imports are likely to grow 1.1 per cent and 1.3 per cent, respectively, with trade surplus remaining sizeable at RM91.4 billion. The goods account is estimated to record a
from RM109.6 billion last year following subdued global trade and prolonged low oil prices. Bloomberg pic
smaller export receipts from commodities.
The services account is expected to remain in deficit at RM22.1 billion from RM21 billion deficit recorded last year largely attributed to higher payments for freight and other services.
During the first half, the services account recorded a deficit of RM11.5 billion due to the large net payment for transportation, insurance, construction and professional services.
The primary income account comprising investment income and compensation of employees is expected to record a higher deficit of RM35.4 billion from RM32 billion deficit last year to be driven by higher payments of profits, dividends and interests by foreign investors in Malaysia.
Net outflows in the secondary income account is expected to increase
to RM23.9 billion from RM21.9 billion following higher remittances by foreign workers.
Gross outflows are expected to increase 11.2 per cent to RM37.6 billion due to the increase in minimum wage effective July 1, this year.
Meanwhile, gross inflows are expected to expand 14.8 per cent to RM13.7 billion from RM11.9 billion last year.
The report said the financial account turned around to record net inflows of RM15.3 billion in the first half of this year mainly due to higher net inflows of direct and portfolio investment.
Malaysia’s international reserves amounted to RM405 billion or US$97.7 billion as at September 30 this year, adequate to finance 8.4 months of retained imports and is 1.2 times the short-term external debt.