Malaysia: Trade Balance figures in record levels – UOB

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

Key Takeaways

“Malaysia’s external trade outperformed last month with total trade, export, and import values breaching their all-time highs. Both export (Jun: +38.8% y/y, May: +30.4%) and import (Jun: +49.3%, May: +37.3%) growth beat our estimates (exports: +18.5%, imports: +34.0%) and Bloomberg consensus (exports: +21.2%, imports: +32.0%), leaving a larger trade surplus of MYR21.9bn in Jun (May: +MYR12.7bn).”

“Jun’s export growth was mainly driven by increased demand for electrical & electronics (E&E) and commodity related products (i.e. refined petroleum, liquefied natural gas (LNG), and palm oil) amid higher commodity prices. Overseas shipments to most trading partners also penciled in strong increases with exports to the ASEAN region, Japan, and New Zealand surging more than 50%. Highest monthly export value was also registered to ASEAN, the US and the EU.”

“We raise our 2022 full-year export growth forecast to 18.0% (from 8.0% previously, BNM est: +10.9%, 2021: +26.0%) after taking into account robust export growth of 26.1% in 1H22 and expectations of softer export growth momentum in 2H22 brought by rising cost pressures, shortages of raw materials and foreign labour, and currency volatility. In addition, there are signs of global tech cycle entering a soft patch. The near-term outlook for Malaysia’s palm oil exports is also clouded by the recent sharp fall in crude palm oil prices as well as Indonesia’s excess supplies and removal of export levy.”