Exports and imports continued to maintain double-digit growth for the sixth and 11th consecutive month respectively. For the first month of 2022, both exports and imports grew by 23.5% and 26.4% respectively. As a result, trade surplus remained healthy at RM18.4bil.

Exports are expected to remain strong in 2022 supported by robust demand, firm commodity prices, healthy imports and retail exports. Advantage from low base, which provided a partial uplift to January’s data, would dissipate. For the full year of 2022, we are projecting Malaysia's exports to grow around 8% to 10% as our base case.

Strong Exports Expected to Fuel Growth

Highlights

• Total foreign trade expanded at double-digit in January 2022 as it grew by 24.8% y/y to RM203.0bil. This is supported by strong exports, which expanded 23.5% y/y to RM110.7bil, marking the fifth consecutive month that exports’ value exceeded RM100bil. Also, exports have recorded its double-digit growth for sixth consecutive months.

• At the same time, imports maintained its strong growth of 26.4% y/y to a total of RM92.3bil. Imports have been seeing double-digit growth since February 2021..

• Manufacturing exports remained healthy. It grew by 19.3% y/y and have been in the double digits since August 2021. Powering the strong manufacturing performance was the electronic & electrical segment. Benefitting from the favourable global demand, this segment expanded by 22.1% y/y.

• Other major export-related manufacturing activities that supported export performance were petroleum products with a 39.2% growth and chemicals & chemical products at 31.6%. However, rubber-related exports dwindled 53.5% y/y after posting a double-digit growth since March 2021.

• On the commodities segment, palm-oil and palm-oil related products surged by 107.1% y/y. Other agriculture-related products that performed well were natural rubber with a 26.9% growth. This led to a strong jump in January’s agriculture growth by 75.% y/y, the highest reported since November 2021.

• Mining rose 38.4% y/y in January, the biggest growth since the November 2021, influenced by the strong exports performance from liquefied natural gas (LNG), up 71.9% y/y. Besides, crude oil-related activities grew by 5.2% y/y.

• Imports’ growth accelerated to 26.4% y/y (December 2021: 23.6%), which was boosted by the firm increase of intermediate goods of 28.3% y/y (December 2021: 27.1%), capital goods with a 37.7% growth (December 2021: 20.9%), and consumption goods with a 32.0% y/y increase (December 2021: 13.1%).

• Hence trade balance tilted to a surplus of RM18.4bil, posting a yearly growth of 10.9%.

Key Takeaways

• January’s strong performance was supported partly by a low base besides strong demand, firm commodity prices and healthy imports. While imports are expected to stay health, the positive low base effect is poised to fizzle out.

• On the whole, exports are envisaged to perform favourably in 2022 while being supported by re-exports. For the full year of 2022, exports are projected to grow around 8% to 10% as our base case.

Source: AmInvest Research - 21 Feb 2022