Exports grow to RM87.9bil

KUALA LUMPUR: Malaysia’s exports rebounded unexpectedly by 1.7 per cent to RM87.96 billion in July but analysts warn local manufacturers to brace for more challenges ahead given the faltering trade globally.

The local exports bounced back from a 3.7 per cent drop in the previous month, lifted by solid demand for manufactured goods and higher shipments to China.

The 1.7 per cent growth was above the 2.5 per cent decline forecast by economists in a Reuters poll.

The country’s total trade for July, however, eased 1.9 per cent to RM161.65 billion from RM163.95 billion recorded a year ago.

International Trade and Industry Ministry said Malaysia’s trade surplus surged 75.6 per cent YoY to RM14.27 billion in July, chalking up its 261st consecutive month of surplus since November 1997.

Over the first seven months, the total trade went down 1.4 per cent to RM1.06 trillion, with exports slipping 0.4 per cent to RM569.46 billion and imports dropping 2.6 per cent to RM487.84 billion.

The trade surplus, however, increased 15.9 per cent to RM81.62 billion.

Bank Islam Malaysia Bhd’s chief economist Dr Mohd Afzanizam Abdul Rashid said the trend was very much in line with weaker Global Purchasing Managers Index for manufacturing sector, which remained below 50-point demarcation line for four consecutive months.

“The latest reading was at 49.5 points in August, up slightly from 49.3 points in July. In US, we already the ISM index for manufacturing fell to 49.1 points in August from 51.2 points previously.”

He noted that this was the first time the ISM index fell below 50-point demarcation line since August 2016.

“Last year, Malaysia’s export grew by 7.3 per cent and the first seven months of this year, exports fell by 0.4 per cent. As such, Malaysia exports growth could stay flat in 2019 in view of the global uncertainties,” he said.

MIDF Research said while exports growth averaged at a negative 0.4 per cent year-on-year, monthly average of 2019 so far recorded at RM81.4 billion. This was still lower than the monthly average of RM83.7 billion in 2018, in term of absolute value.

“Continuous decline in imports of capital and intermediate goods indicate weak prospects for future exports.

“With faltering trade globally derive from rising protectionism and loss of momentum in some major economies, especially in Europe, we do not foresee a huge comeback in second half of 2019,” it said.

Malaysia’s major exports in July included E&E products (RM36.04 billion), petroleum products (RM6.38 billion); chemicals and chemical products (RM4.88 billion), machinery, equipment and parts (RM3.74 billion) and manufactures of metal (RM3.59 billion).

From January to July 2019, exports of manufactured goods grew 0.8 per cent to RM479.66 billion, driven by higher exports of E&E products, iron and steel products, chemicals and chemical products as well as processed food.

Exports of mining goods contracted 1.2 per cent to RM48.51 billion mainly due to lower exports of crude petroleum.

Exports of agriculture goods decreased 6.3 per cent to RM37.11 billion mainly as a result of lower exports of palm oil and palm oil-based agriculture products.

Source: NST