Malaysia’s Trade Declined in March

Malaysia's total trade declined by 1.6% y/y in March 2023 to RM232.7 billion, with exports falling by 1.4% to RM129.7 billion (February 2023: 9.8% y/y) and imports contracting by 1.8% to RM103.0 billion (February 2023: 12.4% y/y). Trade surplus widened to RM26.7 billion (February 2023: RM19.6 billion). For the first three months of 2023, exports now grew by 3.3% on average, which is below our current forecast of 5 – 10%.

The negative growth number is due to a higher base recorded back in March 2022. On a month-on-month basis, both exports and imports grew by 15.5% m/m and 11.1% m/m respectively.

All Exports of Key Sectors Recorded Annual Decline

Shipment of agriculture products declined by 10.8% y/y (February 2023: -9.0% y/y), manufacturing by 0.4% y/y (February 2023: 9.5% y/y) and mining by 3.5% y/y (February 2023: 34.8% y/y). Nonetheless, all three sectors grew on month-onmonth basis, by 31.8% m/m, 14.2% m/m and 13.0% m/m respectively. Shipments to China, which accounts around 13.0% of overall exports improved by 16.2% m/m, after declining since December 2022 due to the strict Covid-related policy in China.

Overall Imports Growth Declined

By end use, imports of intermediate goods declined by 8.7% y/y (February 2023: 2.9% y/y). However, imports of capital goods increased by 3.5% y/y (February 2023: -0.7% y/y), mainly due to higher imports of industrial transport equipment. Imports of consumption goods also increased by 6.2% y/y (February 2023: 1.0% y/y), where main impetus came from food & beverages, and semi-durable consumer goods.

Our Take

We expect slower trading activities going forward as guided by recent information flow. The manufacturing PMI which has been under the contractionary level since September 2022 remains weak. Latest industrial production (IP) numbers, especially for the export-oriented segments, has also been trending lower over the same period.

Pessimism in global economy is largely due series of interest rate hikes and inflations proven to be stickier than expected. Overall, we expect Malaysia’s economy to grow at 4.5% for 2023, mainly supported by domestic factors including improving labour market, investment realisation, and improvement in the construction and the agriculture sectors.

Source: AmInvest Research - 20 Apr 2023