Malaysia: Exports outlook remains bumpy – UOB

Julia Goh, Senior Economist at UOB Group, and Economist Loke Siew Ting assessed the latest export data in Malaysia.

Key Quotes

“Gross exports unexpectedly reversed course and declined by 2.9% y/y in Aug (Jul: +3.1% y/y), bringing year-to-date export contraction to 5.8% in the first eight months of 2020 (Jan-Aug 2019: +0.8%). Aug’s export reading was much worse than our estimate (+4.0%) and Bloomberg consensus (+4.9%). Gross imports continued to drop for the sixth month by -6.5% y/y (Jul: -8.7% y/y). With these, trade surplus narrowed to MYR13.2bn from a record high of MYR25.3bn in Jul.”

“The unexpected decline in exports last month was across the board. Both overseas shipments of manufactured and agriculture goods took a backseat after steep falls in manufactures of metal, chemicals & chemical products, machinery, equipment & parts, sawn timber & moulding, and natural rubber. Exports of mining goods still saw a sharp decline for 14 months, largely due to the persistent weakness in exports of liquefied natural gas.”

“The surprise setback in Aug exports amid year-ago low base comparison reaffirms our view of a bumpy ride for Malaysia’s export outlook. A return to softer manufacturing Purchasing Manager Indices (PMIs) in most countries including Malaysia and resurgence of COVID-19 infections may further undermine the pace of recovery. We maintain our export projection of -3.5% for this year before rebounding to +4.0% growth in 2021.”