Malaysia’s exports are expected to improve for the remainder of the year following the stronger – than – expected export growth of 12.3% recorded in July 2024.
The optimism hinges on higher demand for electrical and electronics (E&E), driven by the global technology upcycle and resilient demand for commodity – based products.
Malaysia’s exports in July 2024 beat economists’ estimates to record a 12.3% year – on – year (y – o – y) growth to RM131.15 billion, against RM116.75 billion a year ago. This brought the export growth to 5.1% between the January – to – July period.
The 12.3% y – o – y growth in July 2024 is the highest since November 2022 and above the consensus estimate done by Bloomberg and Reuters, with both forecasting the country’s exports to grow by 9%.
The strong export data has prompted UOB Global Economics and Markets Research to revise its full-year export growth forecast to 7.6%, up from 3.5% previously. Previously, Bank Negara Malaysia has projected the country’s exports to grow 5% in 2024, following an 8% contraction in 2023.
The research firm said July’s export figure also surpassed its estimates of 8.5%, partly due to year-ago low base effects.
The revision of the export projection also takes into consideration the ongoing recovery in E&E exports along with the global tech upcycle, resilient demand for commodity – based products as well as the continuation of favorable base effects, said UOB.
Further, it said the Malaysian government’s bold and effective implementation of various national master plans, including the National Semiconductor Strategy, will provide a fillip to trade prospects in the near term.
“Last but not least, the latest S&P Global manufacturing PMI (purchasing managers index) survey for Malaysia revealed that new export orders rose for the fourth consecutive month in July and at the joint – fastest pace since Apr 2021.
“Manufacturers cited this improvement in demand as a key factor behind the renewed rise in outstanding business and attributed the increase to stronger demand in the Asia and Oceania regions. This further affirms a brighter outlook for Malaysia’s exports in the coming months,” UOB Global Economics and Markets Research added.
MIDF Research also said Malaysia’s July export growth of 12.3% exceeded its expectation, particularly supported by higher shipments of palm oil and palm oil products as well as a rebound in exports of E&E and petroleum products.
MIDF Research concurred that the pick-up in external demand for manufactured goods exports, including E&E components and other commodities, such as palm oil and natural gas, will support a rebound in exports this year.
Meanwhile, Malaysia’s relatively robust import growth will be supported by companies increasing purchases of raw materials to fulfil growing demand, and restocking activities to minimize risk of supply chain disruptions, MIDF Research said.
Hence, MIDF Research expects Malaysia’s exports and imports to grow further this year. The research house sees export figures growing 5.2% in 2024, with imports expanding to 11.2%. Imports contracted 6.4% y – o – y to RM1.21 trillion in 2023.
Gross imports in July were up 25.4% to RM124.73 billion. Inbound deliveries of intermediate goods, such as automotive parts and electronic components, increased 41.2% in July. Capital goods imports grew by 44.4% while consumption goods expanded by 25.5%.
On a month-on-month basis, exports were up 7.6% while imports were 11.6% higher. Trade surplus, however, narrowed 55.1%.
- The Edge Markets