THE novel coronavirus is starting to make itself felt in Malaysia’s export figures, even as exports drag is likely to intensify in Q2, say Citi economists Kit Wei Zheng and Ang Kai Wei.

March exports fell 4.7 year-on-year, while imports fell 2.7 per cent year-on-year, with trade surplus stable at RM12.3 billion. 

Exports were likely hit both by softer end-demand and the implementation of the Movement Control Order (MCO) from March 18, with businesses either shut or operating below full capacity. 

MCO was in effect for 13 days in March, vs the whole of April. Even as most businesses reopen under the Conditional MCO (CMCO), manufacturers may not necessarily operate at pre COVID-19 levels due to social distancing guidelines, they pointed out. 

Further, the Federation of Malaysian Manufacturers also noted that firms will need time to coordinate the supply chain flow. 

Assuming CMCO remains in place through May, with the GDP drag around half of the full MCO impact, this could still lower 2020 GDP by a further 1 per cent of GDP, all else equal. Although, a second wave of infections (and future lock downs) cannot be ruled out.