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Malaysia: Trade in the right direction
PETALING JAYA: The country’s imports in June 2022 continued to grow at a faster pace than exports, partly because Malaysian households spent more on processed food and beverages sourced from abroad.
The higher imports were recorded amid the weak ringgit, which stayed mostly above the RM4.40-mark against the US dollar in June.
Being a country that relies heavily on food imports, worth RM63.6bil in 2021, Malaysia’s imports were also exposed to the high inflationary pressure faced by its trading partners.
Yesterday, the Statistics Department reported that Malaysia’s total imports surged by 49.3% year-on-year (y-o-y) to hit a new record-high of RM124.23bil in June.
Exports, on the other hand, grew by 38.8% y-o-y to an all-time high of RM146.16bil, marking the 11th consecutive month of double-digit expansion.
Commenting on the performance, MIDF Research said the expansion in exports and imports were stronger than expected, beating the estimates of the research house and the market.
“While this indicates improved growth momentum in line with further reopening of the economy, it also reflects normalisation in domestic economic activities after the nationwide lockdown one year ago,” it said.
Apart from the import of consumption goods that rose by 25.6% to RM9.23bil, Malaysia’s imports in June were also accelerated by the purchase of intermediate and capital goods from foreign markets.
Intermediate goods, valued at RM64.41bil or 51.8% of total imports, increased by 46.9% y-o-y in June, following higher imports of processed industrial supplies.
Meanwhile, capital goods, valued at RM11.15bil or 9% of total imports, grew by 30.4% y-o-y, mainly due to higher imports of industrial transport equipment.
Malaysia continued to see a trade surplus in June. However, the value declined marginally by 0.8% to RM21.93bil.
The Statistics Department said the country’s export growth in June was driven by the strong demand for electrical and electronic (E&E) products, petroleum products, liquefied natural gas as well as palm oil and palm oil-based agriculture products.
“Exports to most major trading partners notably Asean, the United States, the European Union (EU) and Japan recorded double-digit growth.
“The gighest monthly export value was registered to Asean, the United States and the EU.
“Malaysia’s trade performance in June 2022 continued its stellar performance, registering an all-time record high for trade, exports and imports.
“Trade increased by 43.4% to RM270.39bil compared to June 2021, the 17th consecutive month of double-digit growth,” the department said in a statement.
In June, Singapore continued to be Malaysia’s largest export destination, contributing 14.7% to total exports. This is followed by China (12.6%) and the United States (11.5%).
It is noteworthy that Malaysia had a trade deficit with China in June, as the former’s imports from the world’s second-largest economy exceeded exports by almost RM8bil.
For the second quarter of 2022, Malaysia’s total trade grew by 32.7% y-o-y to RM730.36bil.
Exports climbed by 30% y-o-y to RM394.24bil and imports increased by 36.1% y-o-y to RM336.13bil.
This was the highest quarterly value for trade, exports and imports. Trade surplus edged up by 3.2% to RM58.11bil.
Compared to the first quarter of 2022, trade, exports and imports rose by 16.9%, 14.3% and 20.1%, respectively, while trade surplus contracted by 10.6%.
“For the first half of 2022, trade was up by 28.2% to RM1.36 trillion from the same period last year.
“Exports increased by 26.1% to RM739.13bil and imports grew by 30.9% to RM616bil.
“Trade surplus climbed by 6.7% to RM123.13bil. This was the highest half-year value recorded for trade, exports, imports and trade surplus,” according to the department.
In a note issued yesterday, MIDF Research has upgraded its growth forecast for exports and imports for 2022.
“Given the better-than-expected external trade numbers in the first half of 2022, we have upgraded our growth forecast for both exports and imports to 20.9% and 25.6%, respectively.
“We expect growing external demand for E&E and commodities, particularly palm oil and petroleum products, to drive overall exports growth this year, and the firm imports growth will continue on the back of continued improvement in domestic economic activities.”
However, it said it remained cautious about the possibility of slower global growth that may affect future trade activity.
“The downside risks to trade outlook could come from weaker global demand amid rising inflation globally, possible sharp slowdown in the United States due to aggressive monetary policy tightening and weak recovery in China after the Covid-19 lockdown earlier this year,” it added.
Source: https://www.thestar.com.my/business/business-news/2022/07/21/trade-in-the-right-direction