Exports from the country to major trade partners were up, except for Asean
by NUR HAZIQAH A MALEK / pic by RAZAK GHAZALI
THE nation’s trade balance narrowed from RM22.1 billion in October to RM16.8 billion in November, impacted by the surge in Covid-19 cases during the month, although exports and imports improved yearly.
Exports were up by 4.3% month-on-month (MoM), driven by manufacturing and agricultural exports, while imports were down by 2% as low oil prices and travel restrictions muted demand.
Moody’s Analytics analyst Denise Cheok said exports from the country to major trade partners were up, except for Asean.
“The signing of the Regional Comprehensive Economic Partnership last month will boost trade in the region in the long run, but recent waves of Covid-19 infections in Asia, Europe and the US present significant downside risks despite the rollout of vaccines,” she said in a report.
Exports of manufacturing products led to growth, thanks to a strong uptick in electrical and rubber products that will likely drive the country’s trade rebound.
The mining sector remained in a slump due to low oil prices and weak global demand, while agriculture was boosted by high demand for palm oil and its related products.
With Malaysia set to raise its export tax on palm oil from January 2021, it will likely boost exports in December as demand increases in India and China.
Cheok said exports to China, Singapore and the US surged by double digits although it was partially attributed to a low base a year earlier caused by the tech downturn and the US-China trade war.
“Exports to South-East Asia dipped slightly, weighed down by a resurgence of Covid-19 cases in countries such as Thailand, while Indonesia and the Philippines battled a prolonged first wave.
“Imports fell for the nine-straight month, as imports of intermediate, capital and consumption goods all declined,” she said.
According to the Department of Statistics, the export unit value index for the month grew 1% with 111.8 points, contributed by the growth in the index of mineral fuels, animal and vegetable oils and fats, and manufactured goods.
However, the export volume index declined 8.2% versus the previous month to 141.9 points due to the weak performance of animal and vegetable oils and fats, machinery and transport equipment, and inedible crude materials.
The seasonally adjusted export volume index registered a drop of 3.5%, as the year-on-year (YoY) numbers found that the export unit value index dropped 3.2% while the export volume index grew 7.8%.
The import unit value index marginally dropped to 112.2 points in November, attributed to the weak performance of mineral fuels, machinery and transport equipment, and miscellaneous manufactured articles’ indices.
The import value index contracted by 1.8% on the lower index of mineral fuels, manufactured goods and machinery and transport equipment.
On a YoY basis, both the import unit value and volume indices declined by 4.2% and 5% respectively, while the seasonally adjusted import volume index fell 2.1% to 131.8 points.
The overall sentiment from consumers and investors was hit in November due to the surge in Covid-19 cases that triggered a partial lockdown in most states, while the nation’s economic centre in the Klang Valley remains heavily affected.
“Retail sales have been weak since the second quarter and will likely remain below pre-pandemic levels until the middle of next year,” she said.
Official figures also showed that Malaysia’s terms of trade grew 1.1% MoM to 99.6 points in November, with a similar trend seen YoY.
Moving forward, the country’s 2021 budget will cushion the downturn, but an economic rebound will depend on the return of global trade as lockdowns across Europe and the US display significant downside risks.