Economist says it could be worse than earlier anticipated
06/01/2009 (The Star Online), Petaling Jaya - Malaysia’s exports in November are expected to show a decline of 7.3% year-on-year to about RM50.5bil due to the sharp economic slowdown in the developed countries and weak demand for electrical and electronic (E&E) products.

Another major factor is the collapse in the prices of oil and crude palm oil, of which Malaysia is a net exporter.

Year-to-date, E&E exports remain the country’s top revenue generator, accounting for RM217.8bil, or 38.5%, of total exports.

Palm oil and palm oil-based products are second with a combined value of RM56.3bil, or 10%, of total exports while crude petroleum contributed 6.8%, or RM38.4bil, up to October.

CIMB Bank chief economist Lee Heng Guie said Malaysia’s exports this year could be worse then earlier anticipated, “looking at other countries which had just released their data for November”.

South Korea’s exports plunged 18.3% in November from a year earlier, its fastest deceleration since December 2001, while Thailand’s November exports declined sharply, marking its first fall in the past five years.

China’s manufacturing contracted for a fifth month in December as recession in the US, Europe and Japan sapped demand for exports, a survey showed.

Bloomberg reported the CLSA China Purchasing Managers’ Index stood at a seasonally-adjusted 41.2, compared with a record low of 40.9 in November. A reading below 50 reflects a contraction.

“The decline in exports in these countries came earlier than anticipated as the credit crunch triggered by the US mortgage crisis caused importers to reduce and cancel orders,” said an economist.

For now, CIMB is keeping its estimates for 2009, expecting a 3% contraction in exports for this year against last year. Malaysia is expected to release its November trade data tomorrow.

The US-based Semiconductor Industry Association (SIA) said over the weekend that global sales of semiconductors fell in November to US$20.8bil, down 9.8% from US$23.1bil in November 2007 due to the worldwide economic crisis. Sales also fell 7.2% from US$22.4bil in October.

The SIA said excluding memory products, there was a slower year-on-year decline of 4.8% to US$17.3bil from US$18.2bil previously.

Sales for January to November totalled US$232.7bil, up just 0.2% from the first 11 months of 2007 when sales were US$232.2bil.

Excluding memory products, year-to-date industry sales increased 5.6%, according to the association.

Economists said that for last year, they expected exports to rise 10% over 2007 due to the strong demand in the January-September period.

On imports, they expected a marginal 1% decline year-on-year to RM43.6bil due to weaker broad-based demand for consumer and capital goods.

Inter-Pacific Research Sdn Bhd said emerging market economies were far from immune from the global turmoil. In its first-half 2009 strategy report, it said booming commodity prices swelled several developing Asian nations’ earnings.

“Purchasing power of exports (measured by the change in terms of trade multiplies by the increase in export volumes for the period 2000 and 2007) for developing Asia surged by about 140%.

“With the commodity prices easing and export volume dropping, it could adversely affect terms-of-trade this year,” it said.