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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest trade balance figures in the Malaysian economy.

Key Quotes

“Exports staged a strong growth rebound to 13.6% y/y in Sep (Aug: -2.9% y/y), beating our estimate… for a 2.0% y/y gain. Accounting for Sep’s trade data, overall exports rose 4.4% y/y (2Q20: -15.1% y/y) while imports fell -6.3% y/y (2Q20: -15.1% y/y) in 3Q20. This brings the trade surplus to a record high of MYR60.4bn in 3Q20 (2Q20: +MYR27.6bn), which should translate into a higher estimated current account surplus of MYR30.5bn in 3Q20 (2Q20: +MYR7.6bn).”

“Sep’s export growth marked the best performance since Oct 2018, largely on the back of robust demand from China, Hong Kong, EU, US, and ASEAN region for Malaysian exports particularly E&E, palm oil, and rubber products. Low base effects from last year also helped to lift growth.”

“A mixed bag of leading indicators amid a resurgence of COVID-19 infections suggests a bumpy export outlook for Malaysia. The year-to-date export contraction of 3.7% in Jan-Sep affirms our 2020 full-year export projection of -3.5%, partly aided by low base effects. We expect exports to rise 4.0% in 2021, supported by a projected recovery in global demand.”