M’sia’s trade to improve in 2H23 — Analysts
Despite the contraction in yearly term for the month of March, we expect a continuous stabilisation in momentum for both exports and imports, suggesting that bottoming out process in the export growth could ensue by early 2H23.
RHB Research
KUCHING: Analysts are maintaining their projections for Malaysia’s trade outlook for the remaining year following the anticipated recovery in global economy.
RHB Investment Bank Bhd (RHB Research) maintained its view that the trade performance is likely to improve by the second half of 2023 (2H23).
“Despite the contraction in yearly term for the month of March, we expect a continuous stabilisation in momentum for both exports and imports, suggesting that bottoming out process in the export growth could ensue by early 2H23,” it said in its notes yesterday.
“We notice a modest improvement in the export and import momentum in both nominal and real terms for the month of March. Both exports and imports increased by 15.5 and 11.1 per cent respectively compared to the previous month.
“By products, we continued to see stabilisation in momentum for shipments of major products, namely electrical and electronics and chemical products.”
March’s exports declined by 1.4 per cent year on year (y-o-y) versus the Bloomberg consensus estimate of minus 1.9 per cent y-o-y and February’s print of 9.8 per cent y-o-y.
Meanwhile, imports decreased by 1.8 per cent y-o-y in March versus Bloomberg’s consensus estimate of 2.2 per cent y-o-y and February’s 12.4 per cent y-o-y.
On a net basis, the trade balance recorded a wider surplus level of RM26.7 billion versus RM19.6 billion previously.
Despite slightly better-thanexpected trade performance in March, Kenanga Investment Bank Bhd (Kenanga Research) still expect export growth to remain moderate in the coming months.
This is on the back of high probabilities of slipping into contraction due to the normalisation of economic activities, relatively lower commodity prices and the waning effect of the lower base recorded last year.
“Against this backdrop, we keep our 1Q23 GDP forecast unchanged at 5.1 per cent, with full-year growth estimated at 4.7 per cent. Though the impact of the global economic slowdown is still uncertain, we still expect growth to be supported by China’s reopening. On the domestic front, growth is also expected to be supported by resilient domestic demand attributable to a lower unemployment rate, higher tourist arrivals and investments as well as the resumption of infrastructure projects by the government,” it added.
Researchers with MIDF Amanah Investment Bank Bhd (MIDF Research) expected Malaysia’s export growth to moderate to 6.2 per cent this year from a previous forecast of 9.2 per cent. Imports would grow at 6.4 per cent from a previous 9.5 per cent forecast.
The revision in the export forecast reflected the assumption that an anticipated boost from China’s economic reopening would be delayed, it said.
“We still expect recovering demand from China to impact Malaysia’s trade later this year positively. In general, we maintain a cautiously optimistic view that trade will continue to grow, but the outlook can be constrained by elevated inflation, higher borrowing costs, and factors affecting supply (such as geo-political tension or trade disruptions) that will result in even weaker global demand,” it said.
MIDF Research said the positive growth in imports indicates increased purchases of foreign goods on the back of rising domestic spending and investment activities.
Earlier, the Ministry of Investment, Trade and Industry announced that Malaysia’s trade fell slightly by 1.6 per cent to RM232.72 billion in March 2023, while exports declined 1.4 per cent to RM129.71 billion and imports were lower by 1.8 per cent to RM103.01 billion year-onyear (y-o-y).
MIDF Research said the decline was slightly sharper than its and the market consensus as the firm predicted the high base effect and limited upside support from China’s economic recovery would translate into weak year-on-year growth.
It said the decline was also attributable to lower domestic exports (4.1 per cent y-o-y), in contrast to sustained growth in re-exports (10.3 per cent y-o-y).
“We foresee the relatively lower commodity prices will likely influence trade performance in the next few months before the effect diminishes in the second half of 2023,” it added.