01.03.2021 (www.nst.com.my) - KUALA LUMPUR: Malaysia's trade report in January provides renewed optimism that a trade-led rebound has not been weighed down by the movement curbs, which still allow essential manufacturing sectors to operate, Moody's Analytics said.

The pickup in oil prices and global shortage of semiconductors would drive exports for Malaysia's key sectors in the coming months, the firm added.

Malaysia has extended its Movement Control Orders (MCO) in its most economically active states namely Selangor, Kuala Lumpur, Johor and Penang until March 4.

"Although the rest of the country has been placed under more relaxed conditional movement control orders, the four states still under strict MCO measures contribute about 60 per cent of the country's GDP," the firm said.

Analysing the January data, Moody's Analytics said Malaysia's trade surplus came in at RM16.6 billion, a touch below December's RM20.7 billion surplus.

The manufacturing sector, which contributes almost 90 per cent of exports, led the expansion, while agriculture and mining posted a year-on-year decline.

"Exports of electronic products were the main driver of growth, fuelled by a global shortage of semiconductors. Exports to China and Singapore, both large exporters of electronics, were up by 26 per cent and 5.0 per cent respectively," Moody's Analytics said in a statement today.

Exports of rubber and metal products rose as well, as industrial production around Asia Pacific continues to rebound.

"Exports of agricultural goods declined as expected, with export taxes on palm oil starting to kick in at the beginning of the year. Producers had previously frontloaded demand, which was driving the surge in palm oil exports in November and December."

Moody's Analytics said the mining sector continued to slump, although oil prices had recently picked up on the back of tightening supplies and optimism from vaccine rollouts.

Imports extended their upward trajectory from December, after previously posting nine straight months of declines.

Consumption goods saw an encouraging uptick, although this was driven by food and beverages for household consumption, caused in part by increased lockdown measures.

"The rise in intermediate goods also provides some optimism that current lockdown measures have not suppressed domestic production as much as the initial restrictions back in March 2020," the firm said.