Exports growth eased in Dec but remained robust at +29.2% YoY (Nov: +32.4% YoY), faring better than the consensus estimate of +24.4% YoY. Growth was mostly contributed by E&E and palm oil products. Imports also moderated (+23.6% YoY; Nov: +37.9% YoY) following slower growth of capital, intermediate and consumption imports. The trade surplus widened to RM31.0bn (Nov: RM18.9bn).

DATA HIGHLIGHTS

Exports growth eased to +29.2% YoY in Dec (Nov: +32.4% YoY) but remained robust nonetheless, faring better than the consensus estimate of +24.4% YoY. Imports also moderated to +23.6% YoY (Nov: +37.9% YoY). On a monthly basis, exports rebounded sharply (+10.4%; Nov: -1.9%) while imports dipped (-0.4%; Nov: +5.8%). Consequently, the trade surplus widened to RM31.0bn (Nov: RM18.9bn).

In terms of export markets, exports to China strengthened during the month (+28.8% YoY; Nov: +20.5% YoY), driven by E&E as well as LNG, but moderated to other major markets. This includes the US (+33.4% YoY; Nov: +33.6% YoY), ASEAN (+31.4% YoY; Nov: +39.4% YoY), EU (+29.2% YoY; Nov: +30.9% YoY) and Japan (+11.9% YoY; Nov: +27.3% YoY).

The acceleration in manufactured exports (+33.4% YoY; Nov: +27.4% YoY) offset the slower commodity-related showing (+15.0% YoY; Nov: +52.2% YoY). Manufactured exports contributed +25.8ppt to overall growth (Nov: +21.9ppt), led by E&E products (+36.1% YoY; Nov: +17.4% YoY) amid robust semiconductor billings growth (+46.1% YoY; Nov: +50.7% YoY). Machinery, equipment & parts (+37.3% YoY; Nov: +34.3% YoY) and optical & scientific equipment (+25.8% YoY; Nov: +16.4% YoY) also recorded an increase, while chemicals (+36.3% YoY; Nov: +45.9% YoY) and manufacture of metals (+26.5% YoY; Nov: +75.9% YoY) slowed.

Commodity-related exports contribution was lower for the month (+3.4ppt; Nov: +10.6ppt) following continued decline in rubber products (-39.5% YoY; Nov: -33.7% YoY) and crude petroleum (-1.2% YoY; Nov: -13.4% YoY), alongside moderation across the remaining products in this category; LNG (+52.2% YoY; Nov: +99.5% YoY), palm oil (+38.3% YoY; Nov: +97.4% YoY), and petroleum products (+25.6% YoY; Nov: +111.6% YoY).

Meanwhile, imports growth moderated (+23.6% YoY; Nov: +37.9% YoY) amid slower capital (+21.0% YoY; Nov: +32.1% YoY), intermediate (+27.1% YoY; Nov: +47.3% YoY) and consumption imports (+13.1% YoY; Nov: +22.8% YoY). Intermediate imports were mostly supported by industrial supplies, fuel and lubricants, while consumption imports were supported by semi-durable and durable goods, as well as food & beverages.

HLIB’s VIEW

The more widespread Omicron variant on the global front could further limit the efficiency of ports and worsen supply chain pressures that have just started to show tentative signs of easing. Malaysia is still projected to maintain its positive export momentum, supported by continuous demand for E&E products and commodities. However, with supply chain pressures still very much elevated, higher logistics and raw material costs may feed into further inflationary pressures for local goods.

Source: Hong Leong Investment Bank Research - 31 Jan 2022