Exports eased but maintained double-digit growth of +23.5% YoY in Jan (Dec: +29.2% YoY). The main contributors to exports growth were E&E and palm oil products. Meanwhile, the pickup in capital, intermediate and consumption imports drove imports growth higher to +26.4% YoY (Dec: +23.6% YoY). The trade surplus narrowed to RM18.4bn (Dec: RM31.0bn).

DATA HIGHLIGHTS

Exports eased but maintained double-digit growth of +23.5% YoY in Jan (Dec: +29.2% YoY), while imports growth picked up to +26.4% YoY (Dec: +23.6% YoY). On a monthly basis, both exports and imports declined. However, the pace of decline of exports (-10.6%; Dec: +10.4%) outpaced that of imports (-0.6%; Dec: -0.4%), resulting in a narrower trade surplus of RM18.4bn (Dec: RM31.0bn).

In terms of export markets, exports growth softened to all major markets; China (+28.7% YoY; Dec: +28.8% YoY), ASEAN (+19.5% YoY; Dec: +31.4% YoY), US (+17.7% YoY; Dec: +33.4% YoY), EU (+14.6% YoY; Dec: +29.2% YoY) and Japan (+10.0% YoY; Dec: +11.9% YoY). Exports to China, ASEAN, US and EU were mainly supported by E&E products, while manufactures of metal and LNG supported exports to Japan.

Manufactured exports moderated for the month (+24.3% YoY; Dec: +33.4% YoY) while commodity-related exports growth strengthened (+20.7% YoY; Dec: +15.0% YoY). Following this, manufactured exports contributed less to overall growth (+19.4ppt; Dec: +25.8ppt). Machinery, equipment & parts (+36.6% YoY; Dec: +37.3% YoY), chemicals (+31.6% YoY; Dec: +36.3% YoY), E&E (+22.1% YoY; Dec: +36.1% YoY) and optical & scientific equipment (+13.6% YoY; Dec: +25.8% YoY) recorded slower growth, which offset stronger manufacture of metals exports (+53.9% YoY; Dec: +26.5% YoY).

Commodity-related exports contribution increased (+4.2 ppt; Dec: +3.4ppt), driven by strong palm oil exports (+107.1% YoY; Dec: +38.3% YoY) following higher export volume (+45.7% YoY; Dec: -5.1% YoY) and robust average unit value (AUV) growth (+43.5% YoY; Dec: +58.4% YoY). Similarly, LNG strengthened (+71.9% YoY; Dec: +52.2% YoY) on export volume (+3.8% YoY; Dec: -6.9% YoY) and AUV (+65.6% YoY; Dec: +69.1% YoY). Petroleum products (+39.2% YoY; Dec: +25.6% YoY) and crude petroleum exports (+5.2% YoY; Dec: -1.2% YoY) also increased, offsetting the steeper decline in rubber products (-53.5% YoY; Dec: -39.5% YoY).

Meanwhile, imports (+26.4% YoY; Dec: +23.6% YoY) were driven by higher capital imports (+37.7% YoY; Dec: +21.0% YoY), primarily from parts for machinery and mechanical appliances, and intermediate imports (+28.3% YoY; Dec: +27.1% YoY), particularly electrical machinery, equipment and parts. Consumption imports also increased (+32.0% YoY; Dec: +13.1% YoY) following higher imports of processed food and beverages mainly for household consumption.

HLIB’s VIEW

Supply chain issues continue to pose risks to manufacturing and trade activity. While the decline in Global Supply Chain Pressures Index (Dec: 4.25; Nov: 4.34) points to some tentative signs of easing, supply chain pressures remain significantly higher than the pre-pandemic level (Feb 2020: 1.48). Nevertheless, Malaysia is still expected to maintain its positive export momentum, supported by elevated commodity prices and continuous demand for E&E products.

Source: Hong Leong Investment Bank Research - 21 Feb 2022