Malaysia: Trade activity expected to recover – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting, reviewed the latest trade balance figures in Malaysia.

Key Quotes

“Exports fell further by 25.5% y/y in May (Apr: -23.9%)… Imports fell by a wider 30.4% y/y (Apr: -8.0%) bringing the trade balance into surplus of MYR10.41bn (Apr: deficit of MYR3.63bn). Year-to-date exports fell 9.7% y/y in Jan-May.”

“Exports fell in May owing to sustained declines in manufactured (-23.5% y/y), agriculture (-21.3% y/y), and mining (-49.1% y/y). Key export components that contracted further include electrical and electronics, petroleum products, chemicals, palm oil, and LNG. Exports of rubber products grew by 20.5% underpinned by demand for rubber gloves.”

“Market optimism over reopening of economies has wavered following renewed spikes in infection rates particularly in the United States. In Malaysia where the infection curve has remained flat, talks continue about reopening of borders to few countries in the region including Singapore, Brunei, Australia, and New Zealand. PM Muhyiddin said that 95% of Malaysia’s economic sectors have reopened. We think that trade activity should gradually recover in the coming months as restrictions are lifted in low-risk countries while demand and supply conditions resume. Improving economic activity in China and Malaysia’s sustained growth of exports to China is encouraging. We maintain our estimate for exports to decline 10% in 2020 (2019: -1.7%).”