BRIGHT PROSPECTS
MALAYSIA’S exports are likely to expand 10 per cent this year, underpinned by improving key global indicators and recovery in commodity prices. Analysts, however, warn of softer export growth in the second half.
MALAYSIA’S exports are expected to grow nearly 10 per cent this year, after the June figures expanded 7.6 per cent year-on-year (y-o-y) to RM78.66 billion, said analysts.
This would be underpinned by signs of key global indicators and gradual recovery in commodity prices, they added.
Analysts, however, said the expected 10 per cent growth would be slower than the 18.9 per cent expansion last year.
MIDF Research analysts expect Malaysia’s full-year exports to expand 9.3 per cent.
They said for the first half, exports had grown seven per cent y-o-y, far lower than the 20.9 per cent in the same period last year.
“The moderating pace is mainly due to a higher base effect and in tandem with the expectation of a slight slowdown in overall business performance.
“Nevertheless, brewing trade tensions between not only the United States and China but also some other countries on top of escalating geopolitical tension could be a headwind to global trade, including Malaysia,” they added.
Bank Islam Malaysia chief economist Dr Mohd Afzanizam Abdul Rashid said the trade tensions would result in uncertainty among manufacturers that would cause weak business sentiment.
“Already we have seen the global PMI for manufacturing sector continue to decline to 52.7 in July, from 54.4 in January. So, we can expect a softer export growth in the second half of 2018,” he said.
In May, exports grew 3.4 per cent, slowing sharply from a 14 per cent surge in April.
The June export growth was below a Reuters survey of an 11.5 per cent, and RAM Ratings’ forecast of 8.7 per cent.
For the first six months, Malaysia’s exports expanded seven per cent y-o-y to RM482.64 billion, International Trade and Industry Ministry data showed.
This was mainly driven by manufactured goods, whose exports rose by 12.7 per cent y-o-y, or RM7.55 billion, to RM67.19 billion in June, accounting for 85.4 per cent of Malaysia’s total exports.
Imports grew at a slower pace of 3.4 per cent to RM422.09 billion.
This pushed the first half trade surplus 41 per cent higher to RM60.56 billion.
June was the 248th consecutive month of trade surplus since November 1997, said the ministry.
The expansion was supported mainly by higher trade with China, Asean, Hong Kong, Taiwan, South Korea, the European Union, Saudi Arabia, and the United Arab Emirates.
Exports of manufactured goods, which constituted 83.5 per cent of the total exports, rose 9.4 per cent to RM402.9 billion for the period.
This was mainly led by higher exports of E&E products, manufactures of metal, chemicals and chemical products, petroleum products and transport equipment.