Malaysia 2014 trade surplus widens 16.6%, Dec exports grew 2.7% y-o-y

[KUALA LUMPUR] Malaysia's export growth rose to 2.7 per cent in December from a year earlier, as its monthly trade surplus shrank to 9.2 billion ringgit (S$3.5 billion), government data showed on Thursday, as the Southeast Asian economy was hit by falling world prices for its oil, gas and commodity exports.

For the full year, Malaysia posted a surplus of 83.11 billion ringgit (US$23.26 billion), up 16.6 per cent from 2013, with higher demand for manufactured products helping exports to grow 6.4 per cent in 2014, while imports grew 5.4 per cent.

The trade ministry said it expected the trade surplus to increase by 2-3 per cent in 2015 and expected export growth of the same magnitude.

The smaller trade surplus in December was expected after the November surplus came in at a three-year high of 11.13 billion ringgit.

Export growth was still more than expected in December. The median forecast from a Reuters poll of analysts was for exports to grow 1.0 per cent, and for a trade surplus of 9.00 billion ringgit.

"There are some positives in non commodities exports - machinery and chemicals and food exports did quite well," Jeff Ng, economist with Standard Chartered in Singapore. "The general concern is that energy exports continue to contract." Ng said the trade data reflected weak external demand and the negative impact of weak oil prices, but he said the second half of this year could improve.

Malaysia's ringgit currency has underperformed compared with Asian peers as a result of the deterioration in the country's external balances and pressure on its fiscal deficit due to the slump in oil and gas earnings.

The ringgit lost 0.45 per cent against the dollar by lunchtime on Thursday.

Michael Wan, an economist at Credit Suisse in Singapore, said Malaysia had still to feel the full impact of the oil price slump on its exports of liquefied natural gas.

"On the imports, capital and consumption goods drove the increase. There's a frontloading of consumption," Wan said, adding that Malaysians were buying ahead of the introduction of a general sales tax in April.

Exports to China, Malaysia's largest trade partner, fell 4.8 per cent in 2014. Exports to the United States rose 11 per cent and exports to India rose 23.9 per cent.

REUTERS