Malaysia’s trade performance to rebound in 2021, say research firms

A bird's-eye view of Kuala Lumpur July 8, 2020. — Picture by Hari Anggara
A bird's-eye view of Kuala Lumpur July 8, 2020. — Picture by Hari Anggara

Follow us on Instagram and subscribe to our Telegram channel for the latest updates.


KUALA LUMPUR, May 28 — Malaysia’s trade performance is expected to rebound in 2021, carrying over the strong momentum in the second half (H2) of 2020 on the back of resumption in activities globally driven by a return to normalcy in the global supply chain, said MIDF Research.

It said Malaysia is benefitting from the strong recovery in its main trading partners mainly China and the United States as reflected by sustained exports to the two countries.

“Vaccine roll-out along with massive fiscal and monetary policy support in major economies will boost demand. Investment appetite is also likely to improve, propelled by better clarity amid vaccine availability,” it said in a note today.

For the first four months of the year, exports and import growth averaged at +27.8 per cent year-on-year (yoy) and +14.3 per cent yoy respectively, and the growths are expected to remain elevated in the near months due to low base effect last year before moderating in H2 2021 as the base effect dissipates.

“We remain cautious on the resurgence of Covid-19 cases in some key countries like Taiwan, Japan, South Korea, India, Thailand and Vietnam which could affect our exports demand moving forward.

“Nevertheless, the robust performance in external trade serves as a buffer to risks of falling domestic demand associated to restrictions currently in place in order to curb the pandemic,” MIDF Research said.

Meanwhile, OCBC Bank (M) Bhd said in a note that Malaysia’s exports surged by a mind-boggling 63 per cent yoy in April for Malaysia, besting expectation of 50 per cent and clocking the fastest growth since February 1998.

Base effect is a supporting factor, but so has the global recovery, especially in semiconductor chips, it said.

“Shipments to China continued to be powering on, growing at an encouraging clip of 28 per cent yoy.

“However, it was the 128.6 per cent yoy uptick in exports to the US that stood out – a sign that Malaysia can ride on the coattails of the ongoing US recovery nicely too,” the bank shared.

The surge in the exports data offers a timely boost to a country hit by another surge of COVId-19 cases, the bank said adding that the past week has seen the country reaching an unfortunate series of new record highs, with the latest tally surpassing 8,000 infections per day.

OCBC noted that the six per cent growth it pencilled for Malaysia was upon the “big caveat” of no full lockdown.

“There would be concerns about the sustainability of the exports strength if stricter measures need to be adopted.

“Hence, the virus development will be crucial to watch in the next few weeks, especially for the industrial heartland of Selangor which has seen one of the worst cases of virus resurgence of late,” it added. — Bernama

Related Articles