KUALA LUMPUR: Malaysia recorded the highest monthly trade surplus of RM17.3 bil in October despite weakening trade flows, an investment bank said.
MIDF Amanah Investment Bank, in a research note on Dec 4, said exports were down 6.7% year-on-year (yoy) but this was compensated by the steeper decline in imports which contracted 8.7% yoy.
“Exports to the world’s two largest economies kept deteriorating, with exports to China falling for the third straight month and recording a double digit fall in October,” it said.
Similarly, exports to the US, although still positive, have been moderating consistently since June this year.
“This demonstrates the direct impact from the US-China trade dispute,” it noted.
The bank observed that sales to most of the major Asean countries also fell during the month.
“For instance, exports to Thailand recorded a more than seven-year low, declining 18.2% yoy due to low sales of electrical and electronics products and crude petroleum,” it said.
The bank said for the January-October period, export growth averaged at a negative 1.8% from the same period last year.
“In terms of absolute value, the monthly average of 2019 so far was at RM81.9 bil, lower than the RM83.7 bil in 2018,” it added.
It viewed the continuous decline in imports of capital and intermediate goods as indicating weak prospects for future exports.
“With faltering trade globally due to rising protectionism and loss of momentum in some major economies, especially in Europe, we do not foresee a huge comeback in the second half of this year,” it said.
UOB Malaysia, in a separate note, said Malaysia’s export outlook for the remaining two months of 2019 and for 2020 remained cautious, given the ongoing uncertainties over the US-China trade talks.
“We maintain our full-year export forecast at a contraction of 1% for 2019, before recovering to a growth of 2% in 2020,” it said.
It also said that the projected recovery next year is expected to be softer relative to past cycles amid the prolonged US-China trade dispute, potential widening of the trade spat to other countries and global tech downcycle that may drag until mid-2020. – Bernama
