Slowing global growth to weigh on domestic trade — Analysis
KUCHING: Analysts are cautious on Malaysia’s trade outlook in the near term view as global growth is on a slowing trend.
In a report, the research team at RHB Investment Bank Bhd (RHB Investment) stayed cautious on the outlook for trade in real terms in the next three to six months as global growth is on a slowing path to trend.
“We expect continued expansion in exports for the upcoming months, albeit at a softer pace,” it cautioned in its review yesterday.
It saw that weakness in the electrical and electronic (E&E) and commodity-based products exports might be become more pronounced in the first half of 2023 (1H23) following the moderation in global demand.
It also highlighted that the semiconductor sales have started to soften as demand for consumer products is slowing, dragged by slower global demand, elevated inflationary pressures as well as impact from geopolitical tensions.
“We remain watchful on the direction of commodity prices in view of increasing uncertainties in global landscape.
“Notwithstanding the weakness from external front, the economic growth is expected to stay robust amid continued support from domestic economic activities as indicated by resiliency in capital and consumer goods imports,” it opined.
“We maintain our full year exports projection to 27.9 per cent y-o-y and our view of slower growth momentum in 4Q22.For the first three quarters months of the year, total exports and imports have expanded by 28.5 per cent and 35.4 per cent respectively.
“We expect the y-o-y growth to slow in upcoming months as the base effect have started to dissipate,” RHB Investment forecast.
Meanwhile, the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) said it maintained its projection for Malaysia exports and imports growth at 26 and 30.5 per cent respectively.
“We expect more moderate growth rates for both exports and imports in the final few months of 2022 as low-base effect diminishes. Thus far, exports and imports rose by 28.5 per cent y-o-y and 35.4 per cent y-o-y, respectively, in 10M22,” it said.
It believe the trade sector stands to benefit from elevated commodity prices, growing external demand for E&E and commodities (petroleum and palm oil), and continued rise in global production and international trade activities.
Imports would expand further on the back of growing domestic demand, and increased business activities and consumer spending.
“Nevertheless, we opine there are several risks to nearterm trade outlook, mostly from external uncertainties such as deterioration in global growth outlook, weaker final demand (as a result of rising inflation and borrowing costs), and escalation of geo-political tensions,” it said.