Malaysia’s exports recovery still firm

KUALA LUMPUR: Malaysia’s exports recovery remains firm amid the resurgence of Covid-19 cases globally, economists said.

The country’s exports have been improving steadily since the initial shocks from the pandemic in April and May this year.

This is in line with resumption in activities globally and particularly benefiting from the recovery in main trading partner China.

Malaysia’s exports increased 4.3 per cent to RM84.43 billion in November compared to the same month last year, marking three consecutive months of year-on-year (y-o-y) growth.

It was also higher than the tepid 0.2 per cent expansion in October.

Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the improvement was a favourable development considering that the global economy was plagued by lockdown measures in several countries.

“It gives hope that the global economic recovery has been quite sturdy which will help Malaysia’s external sector to provide supports to the related industries namely the manufacturing.

“Despite that, we remain cautious on the sustainability of such trend in light of the Covid-19 new infection cases which is still at elevated levels,” he told the New Straits Times yesterday.

On Monday, the Ministry of International Trade and Industry said the overall trade expansion was supported mainly by higher exports to the US, Singapore, China and Hong Kong.

Trade surplus amounted to RM16.82 billion, surging 151.6 per cent and being the highest surplus thus far for November.

The ministry said for the first 11 months of 2020, trade surplus recorded a double digit growth of 23.1 per cent to RM163.86 billion compared to the same period of 2019.

Putra Business School associate professor Dr Ahmed Razman Abdul Latiff said the exports expansion was consistent with continuous upward projection of economic growth for the remaining months in 2020.

“For example, such projection was reflected in Leading Index (LI) which acts as an indicator on the future movement of the overall economy.

“The annual change of LI rose 6.3 per cent in October 2020 to reach 108.7 points from the same month in 2019 and the growth rate of smoothed LI continued above trend,” he said.

Razman said in addition, the confidence brought up by the distribution of vaccines for Covid-19 had signalled a better economic condition for next year.

He said Industrial Production Index remained positive and this also indicates higher export growth.

“Higher rubber and palm oil prices for the past few months also contributed to higher export value,” he said.

MIDF Research noted that Malaysia’s imports continued to contract at an even higher pace of -9.0 per cent y-o-y, the largest drop since May this year.

Overall, total trade fell by 2.0 per cent y-o-y, slightly better than the -2.5 per cent y-o-y registered in October.

The firm has revised exports and imports forecast for 2020 to -2.5 per cent and -6.8 per cent respectively.

Source: NST