By BERNAMA / Pic By ARIF KARTONO

MALAYSIA is expected to record an export growth of 1.5% year-on-year (YoY) in 2020 underpinned by commodity-based sectors, according to economists at several investment banks.

RHB Investment Bank Bhd economist Ahmad Nazmi Idrus said the latest figures might appear that trade could have reached its bottom and is ready for a rebound.

He said the support came from better palm oil prices in recent months and demand from non-electrical and electronics, as well as non-commodity products as reflected in the December 2019 Manufacturing Purchasing Managers’ Index (PMI) data.

“Looking ahead, we expect export growth to remain around 1.5% for 2020, with possible upside revision if the pattern of recovery continues,” he said in a note yesterday.

However, the investment bank is still wary of certain weaknesses, especially with the expectations of modest growth in China and the US.

Malaysia’s total trade recorded positive growth in December 2019 at 1.9% YoY, ending a six-month contraction streak as both export and import grew.

Export in December 2019 expanded by 2.7% YoY after four consecutive months of negative growth, while import increased tepidly by 0.9% YoY following two months of decline.

For the full year of 2019, total trade fell by 2.5% YoY, while export declined by 1.7%.

“For 2020, we forecast export growth to recover slightly by 1.5% YoY,” MIDF Research said in its economic review.

It said commodity-based sectors particularly liquefied natural gas (LNG) exports were expected to perform well especially with the Petronas Floating LNG Facility 2 expected to be operational this year.

The research firm also said the uncertainties over trade war and loss of growth momentum in some major economies would continue to affect exports performance, with another potential risk factor being the 2019 novel coronavirus outbreak.

Meanwhile, JP Morgan Chase & Co Malaysia economist Nur Raisah Rasid said the potential macro impact from the coronavirus outbreak would open room for policy easing in the second quarter (2Q) of this year.

“While we had expected Bank Negara Malaysia to remain on hold through 2020 and adopt a data-dependent stance following last month’s policy easing action, the macroeconomic fallout from the current coronavirus outbreak raises the bias for policy easing.

“Thus, we now expect a 25-basis-point policy easing in the 2Q to address the potential growth impact from the current coronavirus outbreak,” she said in a research note. — Bernama