March exports rebound to 2.2 per cent y-o-y
KOTA KINABALU: March’s external trade exports have made a rebound to a 2.2 per cent year over year (y-o-y) growth from the two per cent contraction seen in February.
On a month on month (m-o-m) basis, this translated to a strong rebound from minus 15.1 per cent m-o-m in February to 20.1 per cent in m-o-m March.
The improvement was in line with market expectations of a 2 per cent y-o-y increase and is largely attributed to higher exports of manufactured goods from 1.5 per cent y-o-y in February to 3.7 per cent in March and higher exports of commodities that jumped to 25.5 per cent y-o-y from -17.7 per cent y-o-y during the same period.
Growth in exports of manufactured goods was driven by higher exports of electrical and electronic (E&E) products which expanded by 8.7 per cent y-o-y in March from an abysmal 0.1 per cent y-o-y growth seen in February.
This was in line with March’s high global semiconductor sales at 20.0 per cent y-o-y.
In commodities, crude petroleum export growth surged to 18.4 per cent y-o-y alongside a crude price that strengthened by 32.6 per cent during the month – averaging at US$70.27 per barrel.
Despite the commendable surge in growth, the growth of commodities was capped in March due to the decline of exports of other commodities such as palm oil, natural rubber and LNG.
While March exports have seen a commendable rebound, imports took a different turn with a sharp decline of 9.6 per cent y-o-y in March from minus 2.8 per cent in February.
According to Affin Hwang Investment B an kBhd(Affi nH wang Capital), this was the sharpest decline seen since September 2009 but was mostly due to an unusually higher base from the corresponding period in FY17.
On a monthly basis, all import subcomponents showed positive growth.
“Nevertheless, on a y-o-y basis, imports of capital goods dropped significantly to -30.5 per cent y-o-y in March.
“Similarly, imports of consumption goods also fell sharply during the month, from 12.6 per cent y-o-y in February to -12.4 per cent in March.
“Meanwhile, imports of intermediate goods, which has the highest share in import basket also fell by 14.4 per cent y-o-y in March, reflected across its subcomponents, including F&B at minus 36.1 per cent, industrial supplies at minus 1.5 per cent, fuel and lubricants at minus 7.2 per cent, and parts and accessories of capital goods at minus 26 per cent,” guided the research house in a securities report.
Due to the rebound in exports and the decline in imports, Malaysia’s trade surplus has widened to RM14.7 billion in March from RM9.0 billion in February.
Cumulatively, this resulted in the first quarter of 2018’s (1Q18) trade surplus closing in at RM33.4 billion.
With this being the highest trade surplus since 1Q10, AffinHwang Capital believed Malaysia’s exports of goods and services will expand by 5.4 per cent in 2018 and that trade surplus will remain healthy in a range of RM96 to 98 billion in 2018.
“However, the potential trade war between US and China will remain a downside risk for Malaysia’s exports in 2018,” added the research house.
Conversely, Kenanga Research is more optimistic on our exports growths and projects that 2018 exports will grow at nine per cent y-o-y as it continues to be supported by a health global trade growth of 3.6 per cent, firm commodity prices, and the favourable 12-month forwardlooking business sentiments.