Better Q3 GDP on the cards, says Maybank IB

Malaysia's exports are reported to have rebounded by 4.4 per cent YoY in the third quarter of 2020. — Reuters pic
Malaysia's exports are reported to have rebounded by 4.4 per cent YoY in the third quarter of 2020. — Reuters pic

KUALA LUMPUR, Oct 30 — A better third quarter real gross domestic product (GDP) is likely on the cards for Malaysia after the country recorded a 17.7 per cent year-on-year (YoY) slump in the second quarter 2020, supported by trade surplus growth in 3Q20, said Maybank Investment Bank Bhd (Maybank IB).

It said exports rebounded by 4.4 per cent YoY in 3Q20, imports eased to -6.3 per cent YoY and trade surplus jumped 68.4 per cent YoY to RM60.4 billion, signalling net external demand growth last quarter (2Q20) after the decline in the fourth quarter of 2019.

However, domestic demand was uneven last quarter as capital goods imports fell -12.6 per cent YoY in 3Q20, pointing to continued weakness in real gross fixed capital formation or investment, while imports of consumption goods rebounded +4.6 per cent YoY, which was encouraging for real private consumption.

“Pending releases of more key economic indicators for September 2020 to complete the 3Q20 picture on the economy, we expect 3Q20 real GDP to have shrunk by a shallower -3.5 per cent YoY versus -17.1 per cent YoY slump in 2Q20,” it said in a note today.

Maybank IB said manufacturing exports recovered by 6.8 per cent YoY in 3Q20 compared with -12.6 per cent YoY in 2Q20.

In September alone, manufacturing exports surged by 16.3 per cent YoY against -0.1 per cent YoY in August, driven by the jumps in electrical and electronics export which rose 33 per cent YoY during the month, and increased in rubber products (115.8 per cent) accompanied by gains in iron and steel products (30.3 per cent); optical and scientific equipment (6.2 per cent), wood products (15.2 per cent), and machinery, equipment and parts (5.0 per cent).

These more than offset the lower shipments of manufactured petroleum products which declined by 29.5 per cent YoY in September 2020, transport equipment (- 35.8 per cent), manufactures of metal (-5.9 per cebt) and manufacture of plastics (-12.8 per cent).

Maybank IB said the industry’s outlook, which continued to remain favourable in view of increasing production capacity for the sector, would create a healthy tech demand. — Bernama

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