May exports trend higher at 32.5%, exceed forecasts

By ALIFAH ZAINUDDIN

Malaysian exports grew at a faster than anticipated rate of 32.5% to RM74.4 billion in May, outpacing imports, which grew 30.4% to RM73.91 billion, the first time exports dominated imports in 12 months.

The seven-year high exports growth figure soared significantly above market expectations, beating a Reuters poll forecast of 21.3% and April’s 20.6% growth.

The rise was driven by double-digit growth rates in all major export sectors, data from the International Trade and Industry Ministry showed.

Trade surplus narrowed to RM5.5 billion from RM8.8 billion in April, supported by a 3% gain in the ringgit during the second-quarter of this year. The currency has been seen as one of Asia’s best performing currencies in 2017 thus far.

Double-digit growth across all sectors was led by manufacturing exports which performed strongly in May, rising 32.7% year-on-year (YoY), boosted by an increase in exports of electrical and electronic products which accounted for 36% of total Malaysian exports.

According to the seasonally adjusted IHS Markit Global Electronics Purchasing Managers’ Index, Malaysia continued to show strength in May, recording a level of 56.3, little changed from the 56.4 level posted in April.

IHS Markit Ltd Asia-Pacific chief economist Rajiv Biswas said global new orders for electronics rose for the 12th consecutive month in May, with the rate of expansion of new orders reaching the highest level since August 2014.

“This continues to signal a positive outlook for Malaysia’s electronics sector in the second-half of 2017 (2H17). IHS Markit forecasts total global semiconductors industry revenue will grow 12.1% in 2017,” he said in a statement.

Additionally, May exports were also boosted by strong exports of agricultural goods, which were up 25.4% YoY. A 27.5% rise in exports of palm oil and palm oil products in May contributed to the strong performance in agricultural exports.

Exports of mining goods also rose sharply by 32% YoY, due to higher volumes and values of crude petroleum exports compared to a year earlier.

On a year-to-date basis, Malaysia’s average value of exports for the first five months of 2017 reached RM75.6 billion, 15.4% higher compared to 2016’s monthly average which stood at RM65.5 billion.

For the cumulative five- month period, exports of manufactures rose 21.6%, while exports of agricultural goods increased 27% YoY and exports of mining goods climbed 31%.

The promising exports performance in May was also credited to an increase in trade among all trading partners, including Asean, China, the US, European Union, India, Taiwan and Australia.

Exports to China saw the highest YoY growth since February 2010, shooting up 51.5% at RM10.73 billion. Meanwhile, exports share to Asean hit 30.3% in May, the first since July 2016. Among the reasons for the rise in share was the improvement in trade activities in the region.

“We expect exports will continue to perform well in 2H17. Continued broad-based recovery in global trade and stable commodities prices are among factors boosting our external trade performance,” MIDF Amanah Investment Bank Bhd said in its research report.

MIDF has upgraded its 2017 exports growth forecast to 14.5%, in line with expectations of solid economic growth among major and emerging economies that are on an uptick momentum with gradual improvement in commodities prices.