Both exports and imports have been fluctuating during the year between the expansion and contraction region. Though exports rebounded in a July with a 1.7% y/y growth, imports remained lackluster, and this is worrying.

Amidst slower global growth and trade outlook, we have revised downwards our 2019’s export and imports to 0.5% and -2.0% respectively from the previous forecast of 2.0% and 1.0%, respectively. While we maintain our 4.5% GDP growth for 2019, we expect the economy to grow slower in 2020 at 4%.

• Our exports performance during the year has been fluctuating between the expansion and contraction. Between January and July, we have reported three contractions. Following a contraction by 3.1% y/y in June, exports in July grew by 1.7% y/y.

• Meanwhile, imports over the period of January to July reported four contractions, with a back-to-back fall in June and July. Imports imports fell by 5.9% y/y in July from -9.2% y/y in June. Hence, trade surplus in July widened to RM14.3bil from RM10.3bil.

• Exports in July benefited from an improvement in E&E, up 4.5% y/y from -6.0% y/y in June mainly coming from: (1) piezoelectric crystals & parts (28.5% y/y from 19.86% y/y); (2) telecommunication equipment (27.0% y/y from 15.1% y/y); (3) thermionic valves & tubes (11.2% y/y from -1.3% y/y); and (4) electrical integrated circuits (10.3% y/y from -5.6% y/y).

• Besides, exports were also supported by: (1) iron & steel products, up 34.8% y/y from 36.5% y/y in June; and (2) furniture products, up 16.8% y/y from 7.2% y/y in June.

• While most of the resource-based products recorded lacklustre growth, LNG continued to propel higher in July, surging 31.3% y/y from 5.5% y/y in June. Crude petroleum fell by 45.7% y/y in July from 31.7% y/y in June while palm oil & palm oil products contracted by 9.9% y/y from a gain of 2.2% y/y in June.

• Importantly, imports poor performance was due to lacklustre showings from both capital and intermediate imports. The capital imports contracted by 12.4% y/y compared to -24.4% y/y while intermediate goods fell 2.4% y/y in July from -3.0% y/y in June. Consumption imports dropped by 4.5% y/y versus -5.3% y/y.

• Exports from our key trading partners remained resilient despite against the slowing global growth. Exports to the US grew 7.9% y/y in July from 8.8% y/y in June while exports to China rebounded 3.2% y/y compared with June's -12% y/y.

• Amidst slower global growth and trade outlook, we have revised downwards our 2019’s export and imports to 0.5% and -2.0% respectively from previous forecast of 2.0% and 1.0%, respectively. While we maintain our 4.5% GDP growth for 2019, we expect the economy to grow slower in 2020 at 4%.

Source: AmInvest Research - 5 Sept 2019