KUALA LUMPUR: Malaysia is expected to record an export growth of 1.5% year-on-year (yoy) in 2020 underpinned by commodity-based sectors, according economists at several investment banks.
RHB Investment Bank Bhd economist Ahmad Nazmi Idrus said the latest figures might appear that trade could have reached its bottom and is ready for a rebound.
He said the support came from better palm oil prices in recent months and demand from non-electrical and electronics, as well as non-commodity products as reflected in the December 2019 manufacturing purchasing managers’ index (PMI) data.
“Looking ahead, we expect export growth to remain around 1.5% for 2020, with possible upside revision if the pattern of recovery continues,” he said in a note today.
However, the investment bank is still wary of certain weaknesses, especially with the expectations of modest growth in China and the United States.
Malaysia’s total trade recorded positive growth in December 2019 at 1.9% yoy, ending a six-month contraction streak as both exports and imports grew.
Exports in December 2019 expanded by 2.7% yoy after four consecutive months of negative growth, while imports increased tepidly by 0.9% yoy following two months of decline.
For the full year of 2019, total trade fell by 2.5% yoy, while exports declined by 1.7% yoy.
“For 2020, we forecast export growth to recover slightly by 1.5% yoy,” MIDF Research said in its Economic Review.
It said that commodity-based sectors, particularly liquefied natural gas exports, were expected to perform well especially with the Petronas Floating LNG Facility 2 due to be operational this year.
The research firm also said that the uncertainties over trade war and loss of growth momentum in some major economies would continue to affect export performance, with another potential risk factor being the 2019 novel coronavirus outbreak.
Meanwhile, JP Morgan economist Nur Raisah Rasid said the potential macro impact from the coronavirus outbreak would create room for policy easing in the second quarter of this year.
“While we had expected Bank Negara Malaysia to remain on hold through 2020 and adopt a data-dependent stance following last month’s policy easing action, the macroeconomic fallout from the current coronavirus outbreak raises the bias for policy easing.
“Thus, we now expect a 25 basis points policy easing in the second quarter to address the potential growth impact from the current coronavirus outbreak,” she said in a research note. – Feb 4, 2020, Bernama
