A low base, improved global economic and trade activities, a semiconductor upcycle and firm commodity prices were the main drivers of exports in March. A further upside to exports will be influenced by the progression of global vaccination roll-outs and the spate of reopening of global borders. Also, our well diversified export base and strong trade linkages helped sustain gains in trade despite lingering uncertainties.

The downside risks could come from new Covid-19 variants, delays or less effective vaccines and geopolitical tensions that could slow the global recovery. Thus, exports are expected to grow by 15% y/y and imports by 13.0% y/y.

• Exports surged 31% y/y to RM104.95bil in March, the strongest expansion in nearly four years. It not only extended the double-digit growth in February of 17.6%, but also surpassed the RM100 billion mark, a level not seen since July 2017.

• The strong exports were supported by higher global demand notably for E&E (semiconductors used in 5G technology and high-performance computing), resourced-based (chemical &chemical products, palm oil) and rubber products.

• Imports also grew at the highest rate since October 2017, up 19.2% y/y to RM80.79 billion. All import components grew in March with capital goods surging by 93.4% y/y; intermediate goods up (12.4% y/y) and consumption imports climbed 13.0% y/y. Thus, trade surplus widened to RM24.2 billion, the highest since July 2020, registering a double-digit growth of 96.1% y/y.

• For the 1Q21, total trade expanded 14.8% y/y to RM505.65 billion. Exports increased 18.2% y/y to RM282.14 billion while imports rose 10.8% y/y to RM223.51 billion.

• A low base, improved global economic and trade activities, a semiconductor upcycle and firm commodity prices were the main drivers of exports. Besides, further upside to exports will be influenced from the progression of global vaccination roll-outs and the spate of reopening of global borders.

• Also, our well-diversified export base and strong trade linkages helped sustain gains in trade despite lingering uncertainties. The downside risks could come from new Covid-19 variants, delays or less effective vaccines and geopolitical tensions that could slow the global recovery.
   
• Nonetheless, with an upside exports growth momentum envisaged, exports are expected to grow by 15% y/y and imports by 13.0% y/y.

Source: AmInvest Research - 30 Apr 2021