Malaysia’s exports up 15% in October, less than economists’ forecasts

MALAYSIA’s exports rose 15 per cent year on year to RM131.6 billion (S$39.7 billion) in October, driven by higher exports of refined petroleum, electrical and electronic (E&E) products and mining products.

But this was a slowdown from the 30.1 per cent rate in September, and also below the 24.1 per cent growth forecast in a Reuters poll of 15 economists.

October imports rose 29.2 per cent year-on-year to RM113.5 billion, according to data released by the Department of Statistics Malaysia on Thursday (Nov 17). This was just below economists’ forecast of 30.5 per cent in the same Reuters poll.

Economists expect further export weakness into 2023 as global growth slows. RHB Research economist Chin Yee Sian and associate research analyst Wong Xian Yong, for example, took a cautious view on Malaysia’s trade outlook in the next three to six months, expecting exports to continue to expand but at a softer pace.

“Weakness in E&E and commodity-based products exports might become more pronounced in the first half of 2023 following the moderation in global demand,” they added. But they expect overall growth to stay robust with continued support from domestic economic activities.

Similarly, UOB senior economist Julia Goh and economist Loke Siew Ting said the latest figures suggest that Malaysia’s merchandise trade activity has entered a soft patch, pointing to volatile commodity prices and exchange rates as other factors weighing on trade growth. UOB expects Malaysia’s exports to rise by a marginal 1.5 per cent in 2023, down from an estimated 26 per cent expansion for 2022.

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Malaysia’s trade surplus narrowed to RM18 billion in October, down from RM37.7 billion in September and a decline of 32 per cent from the previous October.

Barclays economist Brian Tan said that this sharp decline in the trade surplus was due to imports of motor fuel turning positive again, after a one-off dip into negative territory in September.

“With the current account surplus amounting to 1.6 per cent of gross domestic product (GDP) in the first three quarters of this year, we raise our full-year 2022 surplus forecast slightly, to 1.7 per cent of GDP from 1.4 per cent,” he said in a research note.

Tan expects that next year, the goods trade surplus will likely enjoy less support from commodity prices and face greater external headwinds from the slowdown in global economic activity. The services trade deficit will likely narrow further with the continued revival of international travel and tourism, he added.

CGS-CIMB Securities head of economics Nazmi Idrus expects the current account balance to remain in a substantial surplus, underpinned by healthy economic fundamentals and supported by the diversified nature of Malaysia’s exports and robust tourism sector.

On a monthly basis, imports rose only by a marginal 1 per cent in October, while exports, total trade and the trade balance fell by 8.7 per cent, 4.5 per cent and 43.2 per cent, respectively.

For the first 10 months of 2022, Malaysia’s total trade grew 31.6 per cent year on year to RM2.37 trillion, underpinned by the expansion in exports, which grew 28.5 per cent to RM1.29 trillion.

Imports rose 35.4 per cent, exceeding the RM1 trillion mark for the first time. The trade surplus for the same period grew 1.3 per cent to RM205.6 billion.

In October, Singapore and China were the biggest export destinations for Malaysia, contributing 14.8 per cent and 14 per cent respectively.

Exports to Singapore rose 26.4 per cent to RM19.5 billion, driven by higher exports of E&E and petroleum products as well as machinery, equipment and parts. Exports to China rose 4.3 per cent to RM18.4 billion on higher exports of E&E products, liquified natural gas and chemical products.

China and Singapore were also the two biggest sources of imports in October, accounting for 20.4 per cent and 9.5 per cent respectively.

China’s import value grew 21.2 per cent to RM23.1 billion, due to growing demand for machinery, equipment and parts; E&E products; and chemical products. Malaysia’s imports from Singapore rose 9.8 per cent to RM10.8 billion, on higher imports of petroleum and E&E products.