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Julia Goh, Senior Economist at UOB Group, and Economist Loke Siew Ting assessed the latest export data in Malaysia.

Key Quotes

“Gross exports unexpectedly reversed course and declined by 2.9% y/y in Aug (Jul: +3.1% y/y), bringing year-to-date export contraction to 5.8% in the first eight months of 2020 (Jan-Aug 2019: +0.8%). Aug’s export reading was much worse than our estimate (+4.0%) and Bloomberg consensus (+4.9%). Gross imports continued to drop for the sixth month by -6.5% y/y (Jul: -8.7% y/y). With these, trade surplus narrowed to MYR13.2bn from a record high of MYR25.3bn in Jul.”

“The unexpected decline in exports last month was across the board. Both overseas shipments of manufactured and agriculture goods took a backseat after steep falls in manufactures of metal, chemicals & chemical products, machinery, equipment & parts, sawn timber & moulding, and natural rubber. Exports of mining goods still saw a sharp decline for 14 months, largely due to the persistent weakness in exports of liquefied natural gas.”

The surprise setback in Aug exports amid year-ago low base comparison reaffirms our view of a bumpy ride for Malaysia’s export outlook. A return to softer manufacturing Purchasing Manager Indices (PMIs) in most countries including Malaysia and resurgence of COVID-19 infections may further undermine the pace of recovery. We maintain our export projection of -3.5% for this year before rebounding to +4.0% growth in 2021.”