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CGS-CIMB: Malaysia’s trade surplus to continue to support growth despite softening exports
KUALA LUMPUR, April 20 ― The sizeable trade surplus will continue to support Malaysia’s growth this year despite the expectations of softening exports in the months ahead, says CGS-CIMB Securities Sdn Bhd.
Economist Nazmi Idrus said the firm remained positive on Malaysia’s 2023 full-year trade balance outlook despite expectations of softening exports in the months ahead.
“A high base may continue to play a part in nominal trade performance, keeping export growth suppressed, alongside weak global demand.
“However, trade surplus remains sizeable and we believe this will continue to support our current account forecast of 2.1 per cent of Gross Domestic Product (GDP) for 2023 (2022: 2.6 per cent),” he said in a note today.
Overall, CGS-CIMB maintained its 4.4 per cent year-on-year GDP growth forecast for 2023.
Kenanga Research said it foresees export growth to remain moderate in the coming months, with 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, it keeps its first quarter 2023 GDP forecast unchanged at 5.1 per cent (4Q 2022: 7.0 per cent), with full-year growth estimated at 4.7 per cent (2022: 8.7 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 said.
Separately, AmBank Research said it expects a slower trading activities going forward as guided by recent information flow.
“We expect The manufacturing PMI which has been under the contractionary level since September 2022 remains weak. Latest industrial production (IP) numbers, especially for the export-oriented segments, has also been trending lower over the same period”.
The research arm of AmBank Group projected the country’s economy to grow at 4.5 per cent for 2023, mainly supported by domestic factors including improving labour market, investment realisation and improvement in the construction and the agriculture sectors.
On Wednesday, the Ministry of Investment, Trade and Industry revealed that Malaysia’s trade surplus widened in March 2023 to RM26.69 billion compared to March 2022, marking the 35th consecutive month of trade surplus since May 2020 and the highest trade surplus ever recorded for March.
However, trade fell slightly by 1.6 per cent to RM232.72 billion 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-on-year (y-o-y).
The ministry added that trade, exports, imports and trade surplus recorded double-digit growth of 13.5 per cent, 15.5 per cent, 11.1 per cent and 36.4 per cent respectively compared to February 2023. ― Bernama