UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest trade balance results in Malaysia.

Key Takeaways

“Gross exports declined for a second straight month and the most since May 2020 by 17.4% y/y in Apr (Mar: -1.4%) as a result of a shorter working month, year-ago high base effects, lower commodity price earnings, and dimmer global growth prospects. The reading came in worse than our estimate (-2.5%) and Bloomberg consensus (-5.0%). Gross imports also fell by a double-digit pace for the first time since May 2020 at 11.1% y/y (Mar: -1.8%, UOB est: -3.5% vs Bloomberg est: -2.4%). This brought trade surplus down substantially to MYR12.9bn (from +MYR26.7bn in Mar), the smallest trade surplus since May 2022.”

“The steeper-than-expected export contraction last month was weighed by all three economic sectors and almost all products, except for the refined petroleum products. Sluggish demand was also seen across most major trading partners, with shipments to G3 countries, China, and the ASEAN region all recording a double-digit annual contraction.”

“The latest export outturn has resulted in a year-to-date export contraction of 2.6% in the first four months of 2023 (Jan-Apr 2022: +21.7%), posing downside risks to our full-year export outlook. In view of persistent threats to the export outlook and negative base effects becoming more apparent in coming months, we trim our 2023 full-year export growth projection to -7.0% (from +1.5% previously, BNM est: +1.5%, 2022: +25.0%). Key downside risks include geopolitical tensions, potential financial instability stemming from monetary policy tightening, a pronounced growth slowdown in advanced economies, and a more moderate economic recovery in China.”