KUALA LUMPUR: MIDF Amanah Investment Bank Bhd Research (MIDF Research) has revised downward its forecast for Malaysia’s export growth to 0.6% year-on-year (y-o-y) in 2020 from 1.5% y-o-y anticipated earlier.
In a note today, the research house said initially, it anticipated the exports to grow by 1.5% y-o-y in 2020, rebounding from 1.7% 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% 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.
The International Trade and Industry Ministry (MITI) said today that Malaysia’s exports stood at RM84.08 bil in January, registering a marginal decrease of 1.5% from RM85.41 bil in January 2019, while imports slipped by 2.4% to RM72.08 bil from RM73.89 bil previously.
This resulted in a RM12 bil trade surplus in January, up 4.2% from RM11.52 bil in January 2019, it said.
Hence, MIDF Research pointed out, more risks are to be expected in the first quarter of 2020.
“Looking ahead to 1Q20, exports performance is expected to be quite vulnerable, especially with the outbreak of COVID-19, as factory shutdowns in China 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 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% y-o-y and 34% y-o-y, respectively, providing cues on what to expect from Malaysia’s export performance for the same month,” it added. – March 4, 2020, Bernama
