Malaysia: Trade balance surprised to the downside in January – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest trade balance results in Malaysia.

Key Takeaways

“Exports posted the smallest gain since Oct 2020 at 1.6% y/y in Jan (Dec 2022: revised down to +5.9% from +6.0%), undershooting our estimate (+7.5%) and Bloomberg consensus (+9.0%). It also marked the fifth straight month of growth slowdown, in part due to a shorter working month as a result of Chinese New Year celebration. Similarly, import growth dwindled to a 24-month low of 2.3% (UOB est: +10.0%, Bloomberg est: +9.6%, Dec: revised down to +11.5% from +12.0%), leaving a narrower trade surplus of MYR18.2bn last month (Dec: revised up to +MYR28.1bn from +MYR27.8bn).”

“Jan’s export growth surprised on the downside as external demand for both manufactured and agriculture goods declined, which fully offset the impact of higher overseas sales of mining products. Almost all export destinations recorded sluggish performance last month, led by China (-11.9%), the US (-0.6%) and India (-30.6%).”

“We maintain our marginal export growth forecast of 1.5% for this year (MOF est: +2.2%, 2022: +25.0%) given the lingering macro headwinds and year-ago high base effects. Potential spillover effects from China’s economic reopening, Malaysia’s trade diversification and greater access to global markets, as well as commodity price earnings will be wildcards for the country’s export growth outlook this year.”