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

Key Quotes

“Exports recorded a double-digit drop of 23.8% y/y in April (Mar: -4.7%) which came in weaker-than-market estimates (-12.8%) and ours (-18.5%). Imports fell 8.0% y/y (Mar: -2.7%). This pulled the monthly trade balance into deficit of MYR 3.5bn in April (Mar: +MYR 12.31bn), marking the first monthly trade deficit since 1997. Year-to-date exports fell 5.5% y/y in Jan-Apr.”

“April’s export drop were seen across manufactured (-23.4% y/y), agriculture (-13.8% y/y), and mining (-31.6% y/y). There were notable declines in electrical and electronics, petroleum products, chemicals, and LNG. However, exports of some products such as iron and steel, rubber gloves and transport equipment rose. Export shipments to all key trade partners contracted except China.”

“A gradual reopening of major and regional economies alongside restart of most Malaysian business sectors since May provides hope of a modest rebound in trade activity over the coming months. Malaysia’s manufacturing purchasing managers’ index (PMI) showed signs of stabilisation in May though the sector continues to contract. As restrictions under the Movement Control Order (MCO) are gradually lifted, we expect demand and supply conditions to resume. For now, we maintain our estimate for exports to decline 10% in 2020 (2019: -1.7%).”