KUALA LUMPUR, March 4 — MIDF Amanah Investment Bank Bhd Research (MIDF Research) has revised downward its forecast of the country’s export growth to 0.6 per cent year-on-year (y-o-y) in 2020 from 1.5 per cent y-o-y anticipated earlier.
In a note today, the research house said initially, it anticipated the exports to grow by 1.5 per cent y-o-y in 2020, rebounding from 1.7 per cent y-o-y fall in 2019, on the back of the US-China phase one trade deal besides lower base effects.
“However, with more threats to global trade flows emerging, especially COVID-19, we foresee the recovery backed by the US-China phase one trade deal to be modest at 0.6 per cent y-o-y.
“In addition, uncertainties over trade issues and loss of growth momentum in some major economies will continue to threaten our exports performance,” it said.
International Trade and Industry Ministry (MITI) announced today that Malaysia’s exports stood at RM84.08 billion in January 2020, registering a marginal decrease of 1.5 per cent from RM85.41 billion in January 2019, while imports slipped by 2.4 per cent to RM72.08 billion from RM73.89 billion previously.
This resulted in a RM12 billion trade surplus of RM12 billion in January 2020, up 4.2 per cent from RM11.52 billion in January 2019, MITI said.
Hence, MIDF Research pointed out that more risks to be expected in the first quarter of 2020 (Q1 2020).
“Looking ahead to the 1Q20, exports performance is expected to be quite vulnerable, especially with the outbreak of COVID-19, as factories shutdown operations in China and caused disruption in the supply chain,” it said.
In addition, the research house said the US-China phase one trade deal would likely be less successful as China’s commitment to the deal is at stake due to the epidemic.
In fact, MIDF Research cautioned that global manufacturing Purchasing Managers’ Index (PMI) plunged into a contractionary mode in February 2020, while that of emerging economies remain unchanged at 50.1.
“Based on our regional partners’ trade performance in February 2020, exports of South Korea and Vietnam rebounded 4.5 per cent y-o-y and 34 per cent y-o-y, respectively, providing cues on what to expect from Malaysia export performance for the same month,” it said. — Bernama
