Malaysia’s export momentum to strengthen

LUMPUR: MIDF Research has maintained its projection that Malaysia’s overall goods exports will rebound and grow at 5.2 per cent in 2024 compared to negative 8.0 per cent in 2023.

Although electrical and electronics (E&E) exports remained sluggish, the expected turnaround in the E&E trade is one of the factors that will support external trade recovery this year, the research firm said in a note.

It said that although February 2024 was weaker than anticipated, exports managed to grow 3.9 per cent year-on-year (y-o-y) in JanuaryFebruary 2024, rebounding from negative 6.9 per cent y-oy in the fourth quarter of 2023.

“Being one of the players in the global production chain, the trend in Malaysia’s exports also closely tracked the movement in regional countries’ external trade performance, and we noticed an encouraging turnaround in exports for South Korea and Taiwan in the recent months,” it added.

It said that while Malaysia would benefit from the pickup in global demand, downside risks could still negatively affect the country’s trade outlook.

“These include risks such as worsening geopolitical and trade tensions, sharp economic slowdown in major trading partners and prolonged weakness in global production activities.

“Similar to exports, we expect Malaysia’s imports to pick up this year and rebound to 4.4 per cent (2023: -6.4 per cent), on the back of expanding domestic demand as well as increased activities in the manufacturing sector,” it said.

Concurring with MIDF Research, RHB Research has also maintained its optimistic view of Malaysia’s trade outlook for 2024, as export momentum will continue to strengthen in the first half of 2024.

It said the weaker trade figures in February could be due to shorter working days during the Lunar New Year break, which might not accurately reflect the underlying trade momentum. “The unfolding developments reinforce our view, underpinned by a brighter global and regional economic outlook, strengthening economic dynamics of China and the re-acceleration in the global technology cycle,” it said in a separate note.

It said Malaysia’s exports are poised to benefit from the growth in E&E exports, constituting close to 40 per cent of total exports, in tandem with the resurgence of the global technology cycle.

“The E&E exports in Malaysia and other regional countries are expected to gain pace in 2024, given the increased demand for electronic devices, components, and related technologies,” it added.