August’s exports contracted by 0.3% y/y while imports expanded further by 11.2% y/y resulting in a trade surplus of RM 1.6bil, the lowest since October 2014. Exports were dragged by commodity-related items which were cushioned by E&E. Meanwhile, imports grew across the board.

We maintain our exports projection between 6.5% and 7.5% for 2018 due to the ongoing trade war and base effect that will keep growth largely muted. Hence, we project the economy should grow by 5% in 2018.

• August’s exports contracted by 0.3% y/y compared with 9.4% y/y in July while imports expanded further by 11.2% y/y from 10.3% y/y in July. As growth of imports outpaced that of exports, trade surplus stood at RM 1.6bil from RM8.3bil in July, the lowest since October 2014.
• Exports were dragged by commodity-related items i.e. palm oil and palm oil-based products (-22.9% y/y), liquified natural gas (-22.5% y/y), and timber-based products (-2.4% y/y).
• But electrical & electronic products (E&E) and crude petroleum rose 3.2% y/y and 64.9% y/y in August from 23.6% y/y and 90.1% y/y, respectively in July to cushion exports from sliding further.
• Strong imports was supported by capital and consumption goods, up 29.4% y/y and 14.2% y/y respectively in August. Also intermediate goods cli,bed 4.2% y/y from a decline of 0.1% y/y in July.
• We maintain our exports projection between 6.5% and 7.5% for 2018 due to the ongoing trade war and base effect that will keep growth largely muted. Hence, we project the economy should grow by 5% in 2018.

Source: AmInvest Research - 8 Oct 2018