KUALA LUMPUR, May 20 — MIDF Research has maintained its projection that Malaysia’s goods exports and imports will recover this year, growing at 5.2 per cent (2023: -8.0 per cent) and 4.4 per cent (2023: -6.4 per cent), respectively.
In a research note today, the firm expects global electrical and electronics (E&E) trade turnaround and the broad improvement in external demand from major markets to support export recovery this year.
“The pick-up in investment activities and businesses stocking up on materials in anticipation of growing demand will also help imports to recover this year.
“Nevertheless, we remain cautious the ongoing geopolitical conflicts and trade tensions could negatively derail the trade outlook,” it said.
At the same time, MIDF Research is closely monitoring demand, which is constrained by high interest rates kept for an extended period, and possible weaker Chinese growth prospects.
The Investment, Trade and Industry Ministry (Miti) said today that Malaysia’s trade continued its upward trajectory in April 2024, recording a 12.1 per cent growth to RM221.74 billion against April 2023.
MITI said April 2024 exports rebounded by 9.1 per cent year-on-year (y-o-y) to RM114.72 billion after two consecutive months of contraction in line with global trade recovery.
“Growth was contributed mainly by higher exports of machinery, equipment and parts, chemicals and chemical products, crude petroleum, palm oil and palm oil-based agriculture products, and iron and steel products,” it said.
According to MITI, April 2024 exports to Asean, the United States (US) and the European Union (EU) recorded double-digit growth while exports to China rebounded from March 2024’s negative growth.
MIDF Research views April’s stronger external trade as in line with regional trends and expects further pick-up in external demand to support the economy this year.
“We opine that a recovery in exports to major markets signals a broad-based and general pick-up in international trade activity in April.
“We expect growing exports to major markets like the US, China and Asean to support the overall external trade recovery this year,” it said.
The commodity sector will ride on the growing demand for resource-based materials with sustained global growth.
The research firm foresees electrical and electronic (E&E) exports to gradually improve in the coming months in line with better global semiconductor sales and global E&E market turnaround.
“Manufacturing exports will also benefit from global production recovery as firms restock and rebuild inventories,” it added.
OCBC senior Asean economist Lavanya Venkateswaran said there is likely to be some normalisation in export growth in y-o-y terms as favourable base effects fade.
“Notwithstanding that, we expect a trend improvement in export growth supported by E&E exports in the second half of 2024 (2H 2024) as global electronics demand improves in line with our house view.
“The trade and current account surpluses should remain supported. We maintain our 2024 current account surplus forecast of 2.5 per cent of gross domestic product,” she said.
“Resilient growth prospects and solid external balances amid benign inflationary pressures will allow Bank Negara Malaysia to keep its policy rate unchanged in 2024.
“The key risk to our forecasts is from the timing and mechanism in the introduction of targeted fuel subsidies,” she added. — Bernama
