Malaysia: Exports expanded further in February – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the latest trade figures in the Malaysian economy.

Key Takeaways

“Exports sustained its seventh month of double-digit gains with 16.8% y/y in Feb (Jan: 23.9% y/y). This came in higher than our estimate (15.0%) but below Bloomberg consensus (22.1%). Imports rose 18.4% y/y in Feb (Jan: 26.7% y/y). The trade surplus widened to MYR19.8bn (Jan: MYR18.6bn).”

“All major export sectors recorded strong increases led by manufactured (14.2% y/y), agriculture (38.7% y/y), and mining (30.7% y/y) goods.  Key contributors include electrical and electronics (25.8%), chemicals & chemical products (28.2%), palm oil & palm oil based agriculture products (58.9%), manufactures of metal (31.8%), and LNG (45.7%). Export orders from all major markets improved – ASEAN (20.1%), China (19.2%), EU (18.5%), and Japan (15.9%).”

“We expect Malaysia’s export momentum to moderate in coming months mainly due to high base effects from last year. Higher downside risks to global growth and external demand arising from the Russia-Ukraine conflict and commodity price spikes could weigh on Malaysia’s exports via secondary trade channels. Potential upsides include Malaysia being a net exporter of LNG, crude oil, and palm oil, as well as potential diversion of export orders to Malaysia. Noteworthy is the reopening of national borders on 1 Apr will help ease labour shortages for selected key export sectors. Given fluid conditions, we maintain our 2022 export growth forecast of 2.0% (2021: +26.0%).”