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Malaysia: Broad-based surge in exports
PETALING JAYA: Malaysia’s trade performance in October saw the country hit its highest trade surplus in about 18 months with exports crossing the RM80bil mark for the third time this year.
The jump in the trade performance comes after the Nikkei Malaysia manufacturing purchasing manager’s index in November hit its highest point since April 2014 and pointed to robust output at factories in the country.
“Malaysia’s exports in 2017 thus far have been expanding beyond expectations,” said International Trade and Industry Minister Datuk Seri Mustapa Mohamed in a statement on the trade performance for that month.
“We believe that although our export growth will moderate next year due to the high-base effect, it will still grow around 3.4% as projected by the Treasury, driven by continued demand for electrical and electronic (E&E) products and commodities such as crude petroleum and palm oil.”
The increase in exports was broad-based, with gains seen in E&E products, palm oil and petroleum products.
With the help of a weak but improving ringgit, and stronger manufacturing activity globally, exports in October were led by the E&E sector, which accounted for about 38% of total exports, that saw a near 17% increase to RM31.1bil.
Palm oil products, which made up 8.5% of total exports, saw a 63% rise in exports to RM2.9bil.
Refined petroleum products were 5.9% of exports and saw a 13.4% increase to RM4.9bil.
Liquefied natural gas exports were up 6.3% to RM2.9bil. That segment accounted for 3.6% of total exports.
Export of timber products, which were 2.5% of all exports, rose 6.7% to RM2bil.
Imports recorded an increase of RM12.4bil, up 20.9%, to RM71.9 bil in the month.
The Department of Statistics in a statement said total trade in October was valued at RM154.3bil, an increase of RM25.5bil or 19.8% from a year ago. A trade surplus of RM10.6bil was recorded in October, rising RM678.3mil or 6.9% from RM9.9bil registered a year ago. It also increased RM2bil or 22.7% when compared to the previous month, said the department.
Indications are that the robust trade performance is set to continue as it comes on the heels of a jump in output and new orders in factories in Malaysia. The purchasing manager’s index for November rose to a 43-month high of 52 and was supported by the fastest expansion in output in nearly three years.
Nikkei Malaysia said the output growth was reportedly supported by stronger inflows of new work. “Moreover, the rate of expansion in new orders was the most pronounced since October 2014. A number of monitored companies commented on stronger underlying demand conditions.
“Amid reports of stronger overseas demand for Malaysian goods, new export order growth accelerated to the joint-second fastest (behind June 2013) since the inception of the series since July 2012,” it said.
The buoyant activity in the factories has translated to a big improvement in the trade statistics for Malaysia.
Socio Economic Research Centre executive director Lee Heng Guie has forecast Malaysia to register for this year its largest jump in exports since 2010. He expects full year export growth to hit 18.8%.
“October was better than expected and its shows the broad-based recovery in exports,” he said. He has forecast export growth to register 7% next year based on the high based effect of this year. Should it grow by that much, then exports would average about RM82bil a month next year.
MIDF Research said in a note that Malaysia’s strong trade performance was somewhat expected given strong rises seen in South Korea and Vietnam.
“Based on manufacturing conditions last month, manufacturing PMI number for euro area hit the second highest on record at 60.1 points while the US and China stayed on expansionary trajectory as both their PMI figures remain at above 50 points,” it said.
“Henceforth, we predict global trade activities in Q4’17 to remain on an upbeat momentum albeit at a moderating rate amid of unfavourable base effects.”
MIDF has forecast export growth to average 17.3% in 2017 and even though Malaysia’s export growth in the third quarter of 2017 was robust, it expects the growth rate to moderate in the final quarter due to an unfavourable base effect.
“Going forward, continuous strengthening of global demand and modest recovery in commodity prices will support our trade performance,” it said.
Source: https://www.thestar.com.my/business/business-news/2017/12/07/broadbased-surge-in-exports/#As33LYo5P7C0qqgK.99