PublicInvest Research

April 2024 Trade - Resilient Export Outlook

Publish date: Tue, 21 May 2024, 10:49 AM
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In April, Malaysia's exports rebounded, posting a 9.1% YoY growth (-0.9% in March), though below the market expectation of 13.4%. This growth was primarily driven by a 14.5% increase in domestic exports, which comprised 80% of total exports. Conversely, re-exports, making up 20% of total exports, contracted by 8.3%. Gross imports maintained its positive momentum, growing by 15.6% YoY in April (12.5% in March). Consequently, the trade surplus narrowed to RM7.7bn in April from RM12.7bn in March.

The ASEAN region's economic performance is susceptible to fluctuations in major economies such as the US, China, and the EU, posing risks to its trade dynamics. Despite these vulnerabilities, the outlook for 2024 remains optimistic, supported by expected improvements in global trade and a resurgence in electronics exports amid a tech cycle revival. Our projections indicate a 5.4% growth in Malaysia's goods and services exports and a 6.8% increase in imports for 2024. However, these forecasts are contingent on stable global economic conditions, with potential revisions if external circumstances worsen.

April exports. Recent data reveals a notable recovery in Malaysia's export performance, with a YoY growth of 9.1% in April, rebounding from a -0.9% decline in March. This uptrend is primarily driven by increased domestic exports across key sectors. Manufactured goods, which comprised 84.8% of total exports, saw a 7.1% YoY increase in April, propelled by robust exports of machinery, equipment and parts, chemicals and chemical products, and iron and steel products.

Mining goods exports registered the third consecutive month of YoY expansion in April 2024, expanding by 27.5%. The increase was driven by higher shipments of crude petroleum and LNG. Nonetheless, the agriculture goods exports rebounded by 13.8% YoY in April. The growth was contributed mainly by increased shipments of palm oil and palm oil-based agriculture products on higher volume and export prices. Our in-house projection for crude palm oil (CPO) prices persists unaltered at RM3,800/MT for 2024. We expect steady CPO prices in 2024 due to higher CPO production and stiffer competition from other vegetable oils.

Mixed performance in overseas demand in key markets. United States accelerated by double-digit growth of 17.3% in April (3% in March). Meanwhile, exports to Japan declined by 4.3% YoY in April. Exports to the EU edged higher by 11.3% YoY in April. Nonetheless, exports to China rose by 2.1% YoY in April (-2.1% in March), marking its first positive growth since August 2023 underpinned by higher exports of paper and pulp products, chemicals and chemical products as well as manufactures of metal.

Imports remained positive, supported by all three main categories. In April 2024, total imports rose by 15.6% YoY to RM107.02bn. Intermediate goods, which are used as an indicator of export performance going forward, surged by 30.5% YoY. Capital goods increased by 9.7% YoY. Consumption goods grew by 19.5% YoY, driven by higher imports of processed food and beverages. Consequently, Malaysia experienced a trade surplus of RM7.7bn, marking the 48th consecutive month of surplus since May 2020.


Global semiconductor sales in 1Q24 experienced significant YoY growth despite a modest MoM and QoQ decline, reflecting seasonal industry trends. The 2024 global semiconductor market is forecasted to recover robustly, with expected double-digit growth of 13.1%, surpassing prior estimates of 11.8%. This positive outlook marks a crucial point for Malaysia’s manufacturing sector and the global semiconductor industry. Given that E&E exports comprise over 40% of Malaysia’s total exports, this projected upswing is particularly promising. The Ministry of Finance anticipates a 5.5% increase in manufactured goods exports for 2024, reinforcing optimistic expectations.

However, Malaysia's susceptibility to global economic fluctuations, especially in the electronics and semiconductor sectors, is accentuated by the forecasted modest global economic growth in 2024. Dependence on key trade partners like the US, China, and the EU raises concerns for ASEAN trade. Major elections in key trading partners, including the US, South Korea, and India, add complexity, potentially impacting international trade dynamics. The escalation of the Red Sea Crisis poses significant risks, potentially disrupting global supply chains and increasing business costs. In the first two months of 2024, Suez Canal trade declined by 50% YoY, while Panama Canal trade fell by 32%, causing supply chain disruptions and affecting key macroeconomic indicators.

Despite these risks, an expected increase in electronics exports and favourable base effects could mitigate negative impacts. We project Malaysia’s exports of goods and services to grow by +5.4% in 2024. Additionally, the IMF forecasts a 3.2% increase in global GDP for 2023, with a slight upward revision of 0.1 percentage points for 2024 compared to the January 2024 WEO Update, and 0.3 percentage points relative to the October 2023 WEO forecast. However, global growth in 2024 remains below the historical average of 3.8% (2000-2019) due to restrictive monetary policies, reduced fiscal support, and slow productivity growth. As highlighted in the recent trade performance note, Malaysia’s high openness, with a merchandise trade-to-GDP ratio of 144.7% in 2023, makes it vulnerable to global developments. The IMF projects Malaysia’s GDP growth at 4.4% in 2024, revised slightly from the January 2024 forecast of 4.3%. Malaysia's improved ranking in the IMD World Competitiveness Ranking 2023 to 27th place from 32nd in 2022 reflects enhanced economic governance, likely boosting trade, job creation, and economic expansion.

The WTO projects global merchandise trade volume to expand by 2.6% in 2024 and by 3.3% in 2025, driven by a resurgence in demand following the 2023 contraction. Despite the Ukraine conflict, trade volume declined by 1.2% last year after growing by 3.0% in 2022. Current forecasts are clouded by uncertainties from regional conflicts, geopolitical tensions, and rising protectionism. If projections hold, trade volume growth in 2024 could range from 5.8% to -1.6%. Anticipated moderation in 2024 inflation is expected to boost manufactured goods consumption, supporting trade volume growth in 2024 and 2025. Continued inflation declines may prompt interest rate cuts, stimulating investment in capital goods trade, though with a lag effect. As cost pressures ease and business sentiment improves in the EU, consumption and investment are expected to stabilize in 2024 and strengthen in 2025.

Source: PublicInvest Research - 21 May 2024

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