11/04/2011 (Business Times) - Malaysia's export figures in February were a pleasant surprise.

Being a festive month, February traditionally tends to show slower numbers. But analysts now believe that this could be due to increased demand for Malaysian goods from China, one of our top trade destinations.

There were several positive factors to take away from what the International Trade and Industry Ministry announced last week.

For one, exports strengthened 10.7 per cent from a lacklustre 3 per cent rise in January. Then, there is also the bounce in electronic exports, expanding 7.5 per cent in February versus the 15.2 per cent contraction in the previous month.

Trade surplus was also encouraging, showing RM12.6 billion compared with RM9.2 billion in January.

The strong Purchasing Managers' Index, which indicates demand for our exports, for both the US and Europe is also an encouraging sign for non-commodity exports.

But clearer signs of our exports performance will show in the coming months, especially how we were affected by the earthquake and tsunami disaster in March.

While demand for liquefied natural gas and timber may surge, orders for Malaysia's electrical and electronics (E&E) sector, which is still below pre-crisis levels, may be impacted by breaks in the Japanese supply chain.

Timber exports are expected to increase by 5 per cent this year as Japan sets about reconstructing its cities. Last year, Japan imported RM3.7 billion worth of timber and wood products from Malaysia.

Unlike last year, Malaysia's first quarter GDP performance will show a lower contribution from external demand although for January and February, exports expanded by 7.5 per cent.

Wu Kun Lung, an economist with Credit Suisse, remarked that while electronics exports indicated an improvement, it was partly due to a low base effect.

E&E aside, the combined exports of oil, LNG, and palm oil remain in double-digits in year-on-year terms, despite being down month-on-month in February, reaffirming the position of commodities as the main driver for export growth in the past one and a half years.