May Export Boosted By E&E And Palm Oil, Trend Expected To Continue
20/06/2024 (Business Today) - Malaysia’s total trade rose for the 5th straight month at +10.3%yoy in May-24, underpinned by higher exports and imports. The trade surplus also widened to RM10.1b, improving from the post-pandemic low of +RM7.7b in Apr-24 as monthly growth in exports was faster (+11.8%mom) than imports (+10.3%mom). From year-on-year perspective, exports growth was sustained for the second month in a row at +7.3%yoy (Apr-24: +9.1%yoy), stronger than market expectations. Domestic exports expanded further at +13.2%yoy, sustaining growth since Jan-24 and continue to offset the continued contraction in re-exports (-14.1%yoy).
By major products, the continued recovery in E&E and palm oil exports contributed more than two-thirds of the export growth in May-24. Demand from major markets continued to increase, particularly from ASEAN, the US and even continued rise in exports to China. Imports also rose faster than expected albeit moderating to +13.8%yoy (Apr-24: +15.6%yoy), contributed by higher purchases of E&E; machinery, equipment & parts; and crude petroleum. Continued growth in Malaysia external trade was generally aligned with growing regional trade. Looking at the encouraging trade numbers, we continue to expect the recovery in external demand will lend support for Malaysia’s economy to grow faster this year.
Exports and imports to improve this year. MIDF said it maintains a projection that Malaysia’s goods exports and imports will recover this year and grow at +5.2% (2023: -8.0%) and +4.4% (2023: -6.4%), respectively. MIDF said it continues to expect the growing E&E trade and the recovering external demand will support export recovery this year. The house also expects increased investment activities and inventory restocking in anticipation of the increasing demand to support imports to recover from the declines seen last year.
Despite the positive outlook, MIDF remains cautious that the ongoing geopolitical conflicts and the renewed trade tensions could affect near-term trade activities. In addition, final demand especially from major economies may weaken, constrained by the high borrowing costs and concerns over the strength of growth in China.