• Exports grew by 7.6% yoy; imports picked up 14.9%

• Trade surplus narrowed to RM6.0bn, the lowest figure since May 2017

• Higher export growth was driven by manufacturing sector

• Regional trade starting to feel the trickle-down effects of the US-China trade spat

• US-China trade tension could be a headwind to Malaysia trade

Malaysia’s export grew by 7.6% yoy in June following a 3.4% rise in the previous month. The better momentum of exports was mainly driven by double digit growth in manufacturing sector which offset the huge decline in agriculture as well as mining sector. Meanwhile, imports accelerated 14.9% yoy from a slight increase of 0.1% in May. The imports growth has finally outpaced export for the first time in 2018. As a result, the trade surplus narrowed to RM6.0bn in June and marked the lowest figure since May 2017 (RM5.5bn).

On monthly basis, exports fell for the second straight month to -4.2% from -2.5% in the preceding month. Likewise, imports dropped 1.9% mom in June after 3.9% gain in the prior month. On seasonally adjusted terms, exports declined by -5.4% (May: - 3.3%) while imports rose 0.3% (May: -1.7%).

Total trade in June 2018 surged by 11.0% yoy to RM156.3bn as compared to RM136.3bn in the corresponding period of last year. For 2Q18 total trade amounted to RM462.8bn, rose by 8.0% yoy. Exports increased by 8.2% to RM245.0bn while imports grew by 7.7% to RM217.8bn. Trade surplus expanded by 12.9% to RM27.2bn compared to the corresponding period of 2017.

Compared with 1Q18, total trade, exports and imports increased by 4.7%, 3.1% and 6.6% respectively, while trade surplus contracted by 18.5%.

Source: BIMB Securities Research - 6 Aug 2018