Export growth accelerated to 2.7% y/y in December from -5.5% y/y in November supported by resource-based products, while imports rebounded by 0.9% y/y from -3.6% y/y in November. As a result, trade surplus widened to RM12.6bil from RM6.5bil in November. However, our overall trade performance in 2019 was tepid.

Looking ahead, we expect our exports to grow by 1.0%–2.0% for the full year of 2020. External demand will be supported by resource-based products, recovery in global semiconductor sector, and receding uncertainties from trade-related policies. However, risk to our projection remains at this juncture as much depends on the severity and duration of the outbreak of coronavirus.

• Exports growth recorded a five-month high at 2.7% y/y in December from -5.5% y/y in November while imports rebounded by 0.9% y/y from -3.6% y/y in November. As a result, trade surplus widened to RM12.6bil from RM6.5bil in November. However, our overall trade performance in 2019 was tepid with exports and imports averaging at -1.7% y/y and -3.4% y/y respectively, albeit around our projections of -2.2% and -3.9%, respectively.

• The stronger export print was broadly supported by resource-based exports such as petroleum products, up 36.5% y/y in December from -17.2% y/y in November, and palm oil & palm oil-based products, surging by 34.2% y/y from -3.5% y/y in November.

• However, the closely watched electrical & electronic (E&E) shipments continued to decline albeit at a softer pace of 5.4% y/y in December from -11.6% y/y in November. For the full year of 2019, E&E exports slid by 2.2% y/y compared to 11.5% y/y in 2018, reflecting the weaker global demand for semiconductor products, down at an estimated growth of -12.8% y/y in 2019 versus 13.7% y/y in 2018.

• Meanwhile, the growth in imports was driven by intermediate goods (6.0% y/y from 1.8% y/y) and consumption goods (3.2% y/y from 1.9% y/y), although the upside was curtailed by a further decline in capital imports, down 10.9% y/y from -4.4% y/y in November. In 2019, intermediate goods remained resilient, averaging at 1.5% y/y (2018: -3.5% y/y) while consumption goods slowed down to 1.5% y/y (2018: 3.1% y/y) and capital goods deteriorated further by 10.0% y/y (2018: -0.5% y/y).
• Looking at the demand from our major trading partners, exports to China climbed 17.8% y/y in December from 4.1% y/y in November contributed by front-loading activities ahead of the festive season and growing optimism on the trade front. Likewise, outbound shipments to the US accelerated to 15.1% y/y in December compared to 6.5% y/y in November, supported by non-resource products, which rose 17.5% y/y from 7.0% y/y in November.
• Looking ahead, we expect our exports to grow by 1.0%– 2.0% for the full year of 2020. External demand will be supported by resource-based products, a recovery in the global semiconductor sector, and receding uncertainties from trade-related policies. However, risk to our projection remains at this juncture as much depends on the severity and duration of the outbreak of coronavirus.

Source: AmInvest Research - 5 Feb 2020