Malaysia: Export growth momentum eased in May – UOB

Julia Goh, Senior Economist at UOB Group, and Economist Loke Siew Ting, assess the latest trade data in the Malaysian economy.

Key Quotes

“Export growth decelerated by a faster than expected pace to 47.3% y/y in May (Apr: +63.0% y/y), reflecting the impact of reintroduction of Movement Control Order (MCO 3.0) from 12 May. The reading was well below our estimate (+60.0%) and Bloomberg consensus (+57.5%). Conversely, imports posted the largest annual gain since Feb 1998 at 50.3% (Apr: +24.6% y/y), partly due to year-ago low base effects. This brought the trade surplus down further to a 9-month low of MYR13.7bn (from +MYR20.4bn in Apr).”

“Slower shipments of manufactured (especially E&E, refined petroleum and rubber products) and agriculture goods were the main reasons behind the smaller gains in May’s overall exports, while overseas sales of mining products improved further on a persistent recovery in demand for Malaysia’s crude oil and LNG.”

“We expect the pace of the trade recovery in Jun-Jul to be hindered by the current lockdown measures given that only essential export sectors are allowed to operate at 60% capacity. Barring any delays in vaccine supply, the acceleration of the national vaccination program and plans to raise the operating capacity under the four-phase National Recovery Plan (NRP) are set to bring the trade recovery back on track by end-3Q21.”