Malaysia: Exports seen recovering further this year

Senior Economist at UOB Group Julia Goh and Economist Loke Siew Ting give their views on the recent data releases in Malaysia.

Key Quotes

“Exports came in stronger-than-expected by 10.8% y/y in Dec (Nov: +4.6%), with the export value rising to the highest level since Oct 2018 at MYR95.7bn. It also marked the fourth straight month of expansion, beating our estimate (+2.0%) and Bloomberg consensus (+3.6%). Dec’s export improvement was largely driven by robust demand from China, Singapore, US, EU, and Hong Kong, particularly for manufactured products (i.e. E&E and rubber products) and palm oil-related products. Imports also rebounded for the first time in 10 months by 1.6% (Nov: -9.0%), while trade surplus widened to MYR20.7bn in the final month of 2020 (from MYR17.1bn in Nov).”

“For the entire year of 2020, exports contracted for the second consecutive year by 1.4% (2019: -0.8%) as a consequence of COVID-19 pandemic triggering a deep global recession. Imports fell further by 6.3% (2019: -3.5%). Full-year trade surplus widened by 26.9% to MYR184.8bn (2019: +17.7% to MYR145.7bn), which will translate into a larger current account surplus last year (UOB estimate: +MYR62.0bn or 4.4% of GDP; 2019: MYR50.9bn or 3.4% of GDP).”

“We expect Malaysia’s export sector to recover further in 2021 as the global economic recovery gains a firmer footing with countries rolling out vaccination programs to contain the pandemic. Although there are lingering challenges that could lend to a bumpy recovery including delays in vaccine plans and new coronavirus variants, Malaysia’s diversified export base and robust trade linkages remain key sources of growth. We reiterate our export growth projection of +4.0% for 2021 (2020: -1.4%).”

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