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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the prospects for the exports sector in Malaysia.

Key Quotes

“Exports fell 1.5% y/y in Jan (Dec 2019: +2.7% y/y), marking a weak start to the year. Jan’s export decline came in steeper than our estimate (-1.0% y/y)… Imports also fell 2.4% y/y in Jan (Dec: +1.0% y/y). This resulted in a narrower trade surplus of MYR12.0bn (Dec: +MYR12.5bn).”

“Several factors contributed to Jan’s decline including a shorter working month due to the Lunar New Year celebration and the emerging coronavirus (COVID-19) outbreak. China imposed a lockdown in Wuhan and other cities in Hubei province on 23 Jan to contain the virus outbreak. Malaysia’s export weakness is in line with regional peers.”

The outlook for Malaysia’s export sector is less certain despite a gradual pick-up of economic activity in China. As COVID-19 spreads to some of Malaysia’s key trading partners and stringent measures are taken to contain the outbreak, this could prolong the weakness for Malaysia’s exports. The latest batch of global and regional leading indicators has come in weaker than expected. Pending Feb’s trade data, we are likely to revise down our export outlook of +2.0% in 2020.”