Malaysia's Dec export growth below forecast as commodities drag

[KUALA LUMPUR] Malaysia's exports expanded far slower than expected in December on continued weak global demand for the country's commodities.

Exports grew 1.4 per cent from a year earlier, data showed on Friday, down from 6.3 per cent in November and 5 per cent predicted in a Reuters poll.

The global economic malaise has hit Southeast Asia's third-largest economy hard, especially with the slowdown in demand for commodities in China, Malaysia's biggest single trade partner.

Shipments of liquefied natural gas in December fell 36.7 per cent on year, reflecting the weak trend from November, but electronics and electrical products grew 6.4 per cent.

Malaysia still saw a marginal increase of 1.9 per cent in exports in 2015, shipping out RM779.9 million (S$264.3 million) compared with RM765.4 million in 2014.

After the data, the ringgit pared gains to hit a session low of 4.1450 per dollar, but it returned to levels before that. The currency was emerging Asia's worst performing in 2015.

The central bank has said growth will moderate this year and is confident domestic demand will continue to drive growth, buffering some of the impact from low commodity prices, but economists expect more policy support to counter weak exports.

"We still expect Bank Negara Malaysia (BNM) to keep the policy rate unchanged this year, although we acknowledge the risk of further cuts to the statutory requirement ratio," Nomura said in a research note.

Malaysia pared down its 2016 Budget late last month with estimated savings of up to RM9 billion after oil prices fell below US$35 a barrel, far off the government's estimated average of US$48 a barrel for Brent crude.

The central bank had also cut its statutory reserve ratio to 3.5 per cent from 4 per cent prior to the budget review, in a bid to add liquidity into the banking system.

Imports in December grew 3.2 per cent, down from 9.1 per cent in November, and compared with 4.3 per cent forecast by economists.

"We expect ongoing economic headwinds to keep a lid on sentiment and weigh on imports of investment goods," ANZ Research said in a note.

The trade surplus in December eased to RM7.99 billion from RM10.23 billion in November.

Total trade grew 2.2 per cent from a year earlier to RM128.61 billion.

REUTERS