Exports grew strongly by +14.0% YoY (Mar: +2.0% YoY), higher than expectations of +6.3% YoY. Imports also rebounded by +9.1% (Mar: -9.6% YoY). The faster growth in exports emanated from a rebound in commodity sector and further improvement in manufacturing sector. The faster growth in imports emanated from higher capital imports (aeroplanes and parts) while intermediate and consumption imports declined at a slower pace. Higher trade surplus in Jan-Apr 2018 (RM46.4bn; Jan-Apr 2017: RM27.6bn) suggest external trade continued to contribute to economic activity. Nevertheless, we maintain our expectation for GDP to be more moderate compared to 2017.

DATA HIGHLIGHTS

Exports rose at by +14.0% YoY (Mar: +2.0% YoY), higher than median estimate of +6.3% YoY. Imports also rose by +9.1% YoY (Mar: -9.6% YoY). Despite the rise in exports, trade surplus was slightly lower at RM13.1bn (Mar: RM14.7bn).

Exports to most major countries improved except to Japan. By destination, exports rebounded strongly to the EU (+19.4% YoY; Mar: +5.3% YoY), China (+22.0% YoY; Mar: -4.7% YoY) and ASEAN (+13.1% YoY; Mar: -2.8% YoY). Meanwhile, exports to the US grew slightly by +1.7% YoY (Mar: -0.1% YoY).

The faster growth in exports emanated from a rebound in mining sector and continued improvement in the manufacturing sector. In USD terms, Malaysia exports remained in the double-digit territory (+27.2%YoY; Mar: +16.0% YoY).

Exports of commodity related products rose by +5.1% YoY (Mar: -8.9% YoY). Export volume of refined petroleum rebounded by +26.2% YoY (Mar: -5.6% YoY) while export price of refined petroleum also grew by +10.0% YoY (Mar: -3.2% YoY). Similarly, export volume of crude petroleum grew, but at a slightly lower pace of +11.0% YoY (Mar: +14.1% YoY) while export price of crude petroleum rose higher (+10.6% YoY; Mar: +3.7% YoY). Export volume of LNG declined at a slower pace of - 3.5% YoY (Mar: -13.3% YoY) while export price of LNG contracted by -9.3% YoY (Mar: +11.4% YoY).

Manufactured export growth accelerated by +16.6% YoY (Mar: +5.8% YoY). Of significance, E&E exports increased by +21.2% YoY (Mar: +8.7% YoY). In March, global semiconductor sales also continued to demonstrate double-digit expansion (+20.0% YoY; Feb: +21.0% YoY). Optical exports also turned around to record an expansion of +7.7% YoY (Mar: -0.2% YoY). Similarly, metal exports also grew strongly by +42.9% YoY (Mar: +17.7% YoY). Meanwhile chemical exports contracted (-16.6% YoY; Mar: +7.8% YoY).

Imports rebounded to register an increase of +9.1% YoY (Mar: -9.6% YoY) due to turnaround in capital imports (+4.7% YoY; Mar: -30.5% YoY). However, intermediate and consumption imports continued to decline, albeit at a slower pace (-11.9% YoY; - 1.6% YoY respectively; Mar: -14.4% YoY -12.5% YoY respectively).

HLIB’s VIEW

Trade surplus amounted to RM46.4bn in Jan-Apr 2018, higher than trade surplus recorded during the same period last year (RM27.6bn). The expansion in trade data suggests external trade continued to contribute to economic growth in early 2Q 2018. Nevertheless, we maintain our expectation for GDP in 2018 to be more moderate (5.3%) compared to 2017 (5.9%).

Source: Hong Leong Investment Bank Research - 6 Jun 2018