By MARK RAO / Graphic By TMR

Malaysian exports are expected to record an 8.7% year-on-year (YoY) growth to RM79.5 billion in June on steady demand from markets, according to RAM Rating Services Bhd (RAM Ratings).

The rating agency said, this is in spite of the envisaged slowdown amid the Hari Raya festive season as the continued improvement in key export markets’ industrial activity should support demand for the month.

In line with the export growth, the country’s imports are also predicted to rise 8.1% YoY to RM68.3 billion on higher restocking activities but uncertain global trade conditions are hampering import demand for the second half of 2018.

“Re-stocking activities may appear quite resilient at the moment due to sustained global growth, but there seems little impetus to ramp this up significantly in the coming months amid the uncertainty over the current intertwining trade disputes,” RAM Ratings head of research Kristina Fong said in a statement yesterday.

According to the rating agency, China’s import liberalisation which reduced tariffs on the imports of 1,449 consumer products into the country from July 1 this year, could offer more opportunities to global exporters of the said products.

“This import liberalisation is, however, unlikely to result in direct substantial benefits to the country’s export growth as both its export exposure to this basket of goods and comparative advantage in production are low,” it said.

It said Malaysia’s exports of this basket of goods with liberalised tariffs comprised 8.6% of its overall exports in 2017, while those shipped to China represented only 0.3% of total exports.

RAM Ratings forecasts Malaysia’s total trade for this June will increase 8.4% YoY to RM147.8 billion compared to the RM136.3 billion recorded in June 2017.

The rating agency also foresee trade surplus for the month to come in at RM11.1 billion.

Malaysia’s total trade grew 1.8% YoY to RM156.1 billion in May this year led by the 3.4% increase in exports to RM82.1 billion.

Electrical and electronics exports remained the top export contributor for the month, rising 2.1% to RM29.2 billion for a 35.6% share of Malaysia’s total exports, though palm oil and palm oil-based products dropped 15.4% to RM5.8 billion. The latter contributed 7% to May exports.

Imports for the month were up marginally by 0.1% YoY at RM74 billion due to the declines in the import of intermediate, capital and consumption goods, while trade balance for the month was up 47.1% at RM8.1 billion.

South-East Asia, China, Singapore and the European Union were Malaysia’s largest trading partners in May.

Nikkei Malaysia Manufacturing Index showed manufacturing rose for the first time in five months from 49.5 in June to 49.7 in July, but new orders contract further.

July data signalled a broad stabilisation in Malaysian manufacturing conditions during July, primarily driven by output rising for the first time in five months, according to the report released yesterday.

Higher output requirements had encouraged firms to engage in staff recruitment for the second consecutive month. But new business declined for the sixth month in succession.

The latest reading signalled a broad stabilisation in manufacturing conditions across Malaysia.

Malaysia manufacturing output rise in July ended a four-month period of contraction.

New export orders rose for the first time in six months across Malaysia’s manufacturing sector during July. Reports suggest a strong demand from key export markets including the US, Europe and Asia.

However, the latest increase in new export sales was only marginal, the report said.

Malaysian manufacturing companies raised their staffing levels during July, eight times in the past nine months.