- Malaysia’s exports reverted to -8.8% YoY to RM60.4bil in April, owing to the decline in most exports products to major export counterparts (March: +2.3% YoY).

- Overseas shipment of E&E had declined by -3.0% (March: +14.6% YoY), mainly due to lower shipments of electronic integrated circuit.

- Meanwhile, exports of non-E&E products posted a deeper decline compared to the E&E segment. The non-E&E fell by 11.7% – the seventh consecutive month of contraction (or accounted for 65.2% of total exports).

- In particular, petroleum products contracted by 36.6%, while crude petroleum slipped by 44.3%. Also, exports of palm oil had posted a contraction for seven straight months to register -19.8%.

- In terms of export markets, shipments to major counterparts had either slowed or contracted during the month (refer to Chart 1).

- Particularly, exports to the US grew at a slower pace of 7.6% in April (vs. +17.8% in March). Also, demand from China softened to 1.9% in April from +6.6% in the previous month.

- Aside from that, external demand from Singapore and Japan contracted further by 14.9% and 24.9% in April, respectively.

- Elsewhere, overall imports contracted at a slower pace compared to exports. Imports fell by 7.0% to RM53.5bil in April vs. +5.8% in March.

- The decline in imports was attributable to the capital goods (-16.0% YoY) and intermediate imports (-3.0%).

- Nonetheless, imports of consumption goods advanced at a healthy pace of 12.4%, owing to the demand for food and beverages (+9.8%) and consumer good (+15.2%).

- All in, total trade fell by 8.0% YoY to RM113.9bil (vs. +3.9% in March). Also, trade surplus had narrowed to RM6.9bil during the month (March: RM7.8bil).

- That said, we note that the contribution of net trades to GDP has been on a declining trend over the years. On the flipside, the contribution of aggregate domestic demand to GDP has been growing.

- As a percentage of real GDP, net trades accounted for 9.2% of GDP in 1Q15. That compares to the contribution of 15.9% to real GDP in 2010.

- However, current account will continue to maintain a surplus in 2015 owing to positive net trades. We envisage current account to register 3.8% of GDP in 2015 (vs. 4.6% in 2014).

- To recap, Malaysia’s overall current account advanced to RM10.0bil (or accounting for 3.6% of GDP) in 1Q15. That compares to RM5.7bil (or 2.0% of GDP) in 4Q14.

Source: AmeSecurities Research - 9 Jun 2015