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Malaysian exports are seen expanding around 4% this year, according to Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group.

Key Quotes

“Gross exports improved for the third month by 4.3% y/y in Nov (Oct: +0.2% y/y). It came in better than our estimate (-1.0%) and Bloomberg consensus (+3.1%). Gross imports dropped further by 9.0% y/y (Oct: -6.0%). The trade surplus narrowed to MYR16.8bn in Nov (Oct: MYR22.1bn).”

“Nov’s exports were primarily driven by higher demand from the US, Singapore, China, Hong Kong, and EU, particularly for manufactured (i.e. electrical & electronics products and rubber products) and agriculture (i.e. palm oil-based products) goods. Meanwhile, exports of mining goods remained sluggish across all sub-components.”

“While the third wave of COVID-19 infections and the resulting movement restriction orders in major states are expected to impede the domestic economic recovery path in 4Q20, the positive performance by the external sector in Oct-Nov provides some buffer. The year-to-date export contraction of -2.6% in Jan-Nov also suggests that 2020 full-year export projection will come in at -2.4%, which is better than our earlier forecast of -3.5%. This momentum is expected to persist into 2021 with exports projected to rise by 4.0%, amid an expected recovery in global demand.