KUALA LUMPUR, June 20 — Malaysia’s encouraging trade numbers promise continued recovery in external demand, thereby supporting faster economic growth for Malaysia this year, said MIDF Research.
It noted that continued growth in Malaysia’s external trade was aligned with growing regional trade.
The nation's total trade rose for the fifth straight month, growing 10.3 per cent year-on-year (y-o-y) in May 2024, underpinned by higher exports and imports.
“The trade surplus widened to RM10.1 billion, improving from the post-pandemic low of RM7.7 billion in April as monthly growth in exports was faster, at 11.8 per cent month-on-month (m-o-m) than imports (10.3 per cent m-o-m).
“From a y-o-y perspective, export growth was sustained for the second month in a row at 7.3 per cent, stronger than market expectations,” MIDF Research said.
Domestic exports expanded 13.2 per cent y-o-y, sustaining growth since January 2024 and continuing to offset the continued contraction in re-exports, which fell 14.1 per cent y-o-y.
The continued recovery in electrical and electronic (E&E) and palm oil exports contributed more than two-thirds of the export growth in May 2024, with demand from major markets continuing to increase, particularly from Asean, the United States, and China.
“Imports also rose faster than expected albeit moderating to a 13.8 per cent growth y-o-y, contributed by higher purchases of E&E; machinery, equipment & parts; and crude petroleum,” it said.
The research house has maintained its projection that Malaysia’s goods exports and imports will recover this year and grow at 5.2 per cent and 4.4 per cent, respectively.
This is compared to an 8.0 per cent and 6.4 per cent decline in goods exports and imports, respectively, in 2023.
“We continue to expect the growing E&E trade and the recovering external demand will support export recovery this year.
“We also expect increased investment activities and inventory restocking in anticipation of the increasing demand to support imports to recover from the declines seen last year,” MIDF Research said.
Despite the positive outlook, it is still cautious about the ongoing geopolitical conflicts and the renewed trade tensions that could affect near-term trade activities.
“In addition, final demand, especially from major economies, may weaken, constrained by the high borrowing costs and concerns over the strength of growth in China,” MIDF Research added.
— Bernama
