The strong performance by exports and imports in July was partly supported by the low base. Exports jumped by 30.9% y/y while imports rose 11.7% y/y in July. With exports continuing to outpace imports for the third month in a row, trade surplus stood at RM8.0bil.

The global outlook that is poised to remain healthy, added with improving global business and consumer confidences in developed and emerging economies suggest our exports will continue to remain favourable. Hence, we have revised our exports growth projection from 16% to 21% in 2017. That should see the domestic economy expand around 5.7% – 5.9% in 2017 with room to grow even higher.

• The strong performance by exports and imports in July was partly supported by the low base. Exports jumped by 30.9% y/y while imports rose 11.7% y/y in July. With exports continuing to outpace imports for the third month in a row, trade surplus stood at RM8.0bil.

• Apart from the low base, the steady global demand continued to aid manufactured goods such as E&E (+28.3% y/y), chemical & chemical products (+18% y/y), petroleum products (+76% y/y), and machinery, equipment & parts (27.3% y/y). Also, commodity-based export products stayed favourable with LNG up 50.8% y/y and palm oil 13.1% higher y/y while crude petroleum fell 2.1% y/y.

• Healthy import growth comes from intermediate and consumption imports. While the imports for intermediate imports climbed 24.2% y/y, we noticed the imports for consumption increased by 21.8% y/y. Strong growth by the former could be attributed to E&E activities as well as domestic economic activities. As for the latter, it is driven by robust growth in processed food, textiles and jewellery, which strengthened 14.1% y/y, 8.4% y/y and 35.3% y/y respectively. Meanwhile, capital imports shrank by 16.5% y/y dragged by weak growth in transport equipment.

• The global outlook that is poised to remain healthy, added with improving global business and consumer confidences in developed and emerging economies suggest our exports will continue to remain favourable. Hence, we have revised our exports growth projection from 16% to 21% in 2017. That should see the domestic economy expand around 5.7% – 5.9% in 2017 with room to grow even higher.

Source: AmInvest Research - 7 Sept 2017