UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest results from the Malaysian trade balance.

Key Takeaways

“Malaysia’s external trade sector unexpectedly outperformed in Feb, largely due to year-ago low base effects. Gross exports advanced by 9.8% y/y last month (Jan: +1.4%), beating our estimate (+1.5%) and Bloomberg consensus (+4.7%). Gross imports also surpassed our expectation (+1.8%) and Bloomberg consensus (+6.4%), reclaiming a double-digit growth of 12.4% (Jan: +2.2%). This resulted in a trade surplus of MYR19.6bn (Jan: +MYR18.1bn).”

“The surprised export outturn in Feb was mainly driven by a growth rebound in shipments of manufactured goods particularly electrical & electronics (E&E) and refined petroleum products amid low statistical comparison a year ago. This alongside sustained demand for mining goods helped to cushion the persistent drag from exports of agriculture products. Stronger demand for Malaysian products was also observed from the US, Hong Kong, South Korea, and ASEAN region during the month.”

“Despite a decent year-to-date (ytd) export expansion of 5.4% in Jan-Feb, we continue to see downside risks to the external trade sector as the year progresses. Global headwinds will remain while year-ago high base effects become more prominent from Mar onwards. A slower-than-expected China recovery and further monetary tightening in the developed markets are also expected to further weigh on global demand momentum ahead, in addition to softer readings of Malaysia’s leading indicators such as imports of intermediate goods and manufacturing PMI. Hence, we keep our full-year export growth forecast of 1.5% for this year (MOF est: +2.2%, 2022: +25.0%).”