by RAHIMI YUNUS / pic by MUHD AMIN NAHARUL

RHB Research Institute Sdn Bhd has projected Malaysia’s export growth to slow to 3.5% this year from 6.7% in 2018 due to weaker global trade outlook and the US-China trade war uncertainty.

The research house noted that exports registered a sharp decline of 5.3% year-on-year (YoY) in February after expanding 3.1% YoY in the previous month.

“We think the trade weakness was likely distorted by the timing of the Chinese New Year holidays, which fell in early February, compared to mid-month in 2018,” its analyst Vincent Loo Yeong Hong said in the report.

Loo added that the slowdown was mirrored by China’s export data, which saw a 20.7% decline in the same month, though preliminary numbers are pointing to a recovery in March.

He said the weakness in February may seem severe but the distortion is unlikely to be a sign of sustained decline.

Regardless, the combined January-February export performance fell 0.8% YoY from +8% in the fourth quarter of 2018 (4Q18) — pointing to slower export momentum and a possible drag on 1Q19 GDP growth.

RHB Research expects export growth to decelerate further to 3.5% YoY in 2019, (2018: +6.7%), on a weaker global trade outlook and ongoing slowdown in China.

In February, non-electrical and electronics (E&E) exports dropped a further 11.5% YoY after sliding 1.8% in January due to declines in the exports of refined petroleum, chemicals, optical and scientific equipment and machinery and equipment.