Malaysia’s trade outlook promising

Local manufacturers have started to order higher volumes of materials meant to be manufactured for domestic and foreign markets


ECONOMISTS are optimistic of Malaysia’s trade outlook for 2021 although much is anchored by external circumstances.

Institute for Democracy and Economic Affairs senior economist Adli Amirullah told The Malaysian Reserve (TMR) recently that there are several reasons why the trade outlook for the country looks encouraging, this includes the new political shift in the US.

“The end of the Trump administration that led to the US-China trade war ceasefire. The Biden administration is a positive signal that global trade will continue to prosper which will help Malaysia trade activities directly,” he said.

He pointed out that it is now the recovery phase for Asean as a region after the 2020 Covid-19 crisis, indicating that countries have started their economic activity and governments will increase their spending during this recovery phase.

“One of the better ways for the economy to recover is through trade. So, I see this as an opportunity where by increasing our trade activity, it will help the country regain momentum in recovery post-crisis,” he added.

Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff said Malaysia’s trade outlook will continue to chart positive growth in 2021 due to increasing confidence by traders and investors in the government’s commitment to kickstart the economy.

“One latest example was the launch of the Malaysian Economic and Rakyat’s Protection Assistance Package right after Movement Control Order 2.0 was enforced. The RM15 billion package consisted of many direct fiscal injections that will improve the liquidity of the market,” he told TMR.

He remarked that the increase in imports is also an indicator that Malaysian manufacturers have started to order higher volumes of materials meant to be manufactured for domestic and foreign markets, which also means that there is an increasing demand for them.

In a statement yesterday, Moody’s Analytics economist Denise Cheok said December’s trade report provides some optimism for a manufacturing-led rebound in 2021, even as Malaysia continues to battle a second wave of the virus.

“However, much depends on external conditions, which are currently unstable. Lockdowns in Europe and the US are still in place, even as countries race to roll out vaccines.

“Within Asia, parts of China, Thailand, South Korea and Japan have reinstated restrictions. Although the Asia-Pacific region managed to subdue its first wave of the virus relatively quickly thanks to strict lockdowns, it appears that widespread vaccine distribution is necessary for a sustained rebound in the region,” she said.

The Department of Statistics Malaysia (DoSM) reported last Friday that Malaysia’s total exports recorded the highest monthly export value of RM95.7 billion, an increase of 10.8% compared to the same month in 2019, outpacing import growth for eight consecutive months.

Imports rebounded to post a growth of 1.6% to RM75 billion after nine consecutive months of decline.

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin (picture) said the country’s exports continued its positive momentum in December 2020 and that the expansion in exports was supported by both re-exports and domestic exports.

“Re-exports stood at RM17.6 billion which contributed 18.4% to the total exports, surging 22.9%. While the domestic export was valued at RM78.1 billion or 8.3% year-on-year (YoY).

“Trade surplus soared by 64.9% to RM20.7 billion YoY. Total trade in December 2020 amounted to RM170.8 billion, widening by 6.5% compared to December 2019,” he said in a statement.

DoSM also reported that the expansion in exports was supported mainly by higher exports to Singapore, China, the US, India, Hong Kong and the European Union, while increases in imports were mainly from China, India, Hong Kong and Taiwan.

Read our earlier report

Malaysia’s external trade expected to remain modest in 2021