January trade surplus widened to RM11.5 bln from RM10.7 bln
“In contrast, import growth was sustained at a subdued one per cent y- o-y in January, matching the pace in previous month as imports of consumption goods slowed but was mitigated by smaller declines in imports of capital and intermediate goods.
“As a result, January’s trade surplus widened further to RM11.5 billion, from RM10.7 bi l l ion in the previous month.”
Meanwhile, the research team at Kenanga Investment Bank Bhd ( Kenanga Research) saw that by destination of goods, demand for Malaysia’s exports weakened mainly in the US and across the regional economies.
Hong Kong led the slowdown, with its cont r ibut ion to export growth easing to minus 0.6 ppt, followed by Singapore (0.8 ppt) and the US (0.8 ppt).
Bucking the trend, exports to China rebounded sharply by 9.1 per cent y- o-y as factories expedited shipments and replenished their inventories of raw materials ahead of the week- long Lunar New Year public holiday.
“This upbeat data on China’s demand is, however, temporary in nature, and likely will edge down mirroring an expected slowdown in the global economy as well as domestic economic activity,” it said in a separate note yesterday.
“We maintain our view that trade per formance wou l d rema i n sub dued going forward. This is partly based on the IHS Markit PMI Report in February that the manufacturing sector contracted for the f i f th straight month, owing to lower production and lacklustre demand.
“Overall, we foresee 2019 would be a chal lenging year for Malaysia’s exports primarily weighed by the ongoing trade tension between US and China, prospect of cool i ng globa l growt h, China’s slowing economy, a weak EU economy and s lu g g i sh dema nd fo r commodities.”
Whi le China has been agressively supporting its domestic economy through increase liquidity injections to prevent a hard landing, Kenanga Research remained cautiously optimistic on the outcome of the ongoing US- China trade negotiations.
“For 2019, we forecast exports to grow betweenforu to six per cent,” it opined.
“This is in line with an expectation of a downtrend in GDP growth for this year, given growing signs of waning global demand and commodity prices.”