KUALA LUMPUR (May 20): Malaysia’s export growth is expected to pick up pace by the second half of 2024 after reporting a slower-than-expected increase in April, supported by the global recovery in electrical and electronic (E&E) products’ demand.

Malaysia’s exports rebounded at 9.1% in April from a year earlier, as a surge in shipments of machineries, chemicals and palm oil offset a decline in deliveries of petroleum products and subdued electronics demand.

MIDF Research has maintained its projection that Malaysia’s goods exports and imports will recover this year and grow at 5.2% (from -8% in 2023) and 4.4% (from -6.4% in 2023), respectively.

“We expect the turnaround in global E&E trade and the broad improvement in external demand from major markets to support export recovery this year,” MIDF said in a note on Monday.

The recovery in imports should also be supported by the pick-up in investment activities and businesses stocking up on materials in anticipation of growing demand.

“Nevertheless, we remain cautious that the ongoing geopolitical conflicts and trade tensions could negatively derail the trade outlook,” it said.

It noted that consumer demand could also be constrained by high interest rates and possible weaker growth prospects in China.

Likewise, UOB Global Economics & Markets Research also sees Malaysia’s overall export recovery remains on track despite the weaker export headline number in April.

“The soft rebound in E&E exports is also in line with our assessment, whereby a stronger rebound is expected to set in only in the later part of this year,” said UOB in its note on Monday.

The research firm expects that Malaysia’s E&E export will be further supported by the upcoming Semiconductor Strategic Plan (SSP) to move up the value chain.

“Barring any unexpected trade protectionism measures by the West, we keep our trade outlook for Malaysia with a projected export growth of 3.5% for this year,” it noted.

Furthermore, OCBC Global Market Research expects that export growth will likely normalise in year-on-year (y-o-y) terms as favourable base effects fade.

“We expect there to be a trend improvement in export growth supported by E&E exports in 2H2024 as global electronics demand improves, in line with our house view,” OCBC said.

OCBC noted that import growth in April was supported by resilience to domestic demand which it sees will continue to be a key driver of growth this year.

The research house also maintained its 2024 current account surplus forecast at 2.5% of gross domestic product (GDP).

“The key risk to our forecasts is from the timing and mechanism regarding the introduction of targeted fuel subsidies,” it said.