The marginal fall in trading activities is mitigated by encouraging exports
by SHAHEERA AZNAM SHAH / TMR file pix
MALAYSIA’S trade has not been impacted by the global trade tensions, despite the country’s lower total trade revenue recorded in March.
MIDF Amanah Investment Bank Bhd chief economist Dr Kamaruddin Mohd Nor said the marginal fall in the country’s trading activities was mitigated by the encouraging exports.
“The possibility of the trade war particularly between China and the US poses a major threat to our external trade prospects in future, but we have not seen any impact yet on our trade in the past months,” he told The Malaysian Reserve.
According to the Department of Statistics Malaysia’s (DoSM) March statistics, total trade fell 3.5% year-on-year (YoY) to RM154.2 billion, while imports were down by 9.6% YoY to RM69.8 billion.
Kamaruddin said total trade in March was hurt by a significant contraction in the country’s intermediate and capital goods imports, mainly of parts and electrical machinery equipment.
According to MIDF’s Economic Review March 2018, the imports of intermediate goods — which account for 52.8% of total imports — fell 14.4% YoY for the fourth consecutive month in March.
Capital and consumption goods decreased by 30.5% YoY and 12.4% YoY respectively, from a positive growth registered in the previous month.
Kamaruddin said the drop was expected due to the declining trend in the manufacturing Purchasing Managers’ Index (PMI) for the period under review.
“The declining trend signalled a spending reduction, led by unstable demand for the products,” he said.
The DoSM data noted exports grew 2.2% YoY to RM84.5 billion, the highest monthly figure.
“The exports activity back in March was a record high, as it was supported by the higher tradings to non-major markets such as Hong Kong and South Africa.
“Export revenue in the first quarter (1Q) of 2018 expanded by 5.8% YoY to RM237.6 billion, which was the highest 1Q performance since 2010,” he said.
Electrical and electronics (E&E) and crude petroleum remained the major contributing products for the exports.
E&E products, which account for 37.7% of total exports, increased 8.7% YoY to RM31.8 billion.
Crude petroleum, which accounts for 4.3% to total exports, rose 18.4% YoY to RM3.6 billion due to the increase in both export volume and average unit value, the DoSM data noted.
Crude petroleum recorded a double-digit growth of 18.4% YoY in March on stronger crude oil prices.
“We believe the export performance of the key products will stay on an uptick level given the economic environment in major economies are still sanguine both from the consumer and business side, in addition to the recovery in commodity prices,” he said.
The research house is in favour of 9.3% YoY export growth for 2018, reflecting the optimistic signs of key global indicators and gradual recovery in commodity prices.
Based on manufacturing condition and activities, the global manufacturing PMI figures increased to 53.5 points, while it maintained on an expansionary trend at 51.3 points for emerging economies.
The US’ PMI stood at its strongest level since September 2014 at 56.5 points in March, while China and Japan went up to 51.1 and 53.8 points respectively, Kamaruddin said.