Exports moderated to +16.8% YoY in Feb (Jan: +23.9% YoY). Growth was supported by E&E and crude petroleum exports amid moderation across other major export products. Meanwhile, imports also softened to +18.4% YoY (Jan: +26.7% YoY) following moderation in capital, intermediate and consumption imports. The trade surplus widened to RM19.8bn (Jan: RM18.6bn).

DATA HIGHLIGHTS

Exports moderated to +16.8% YoY in Feb (Jan: +23.9% YoY), while imports also softened to +18.4% YoY (Jan: +26.7% YoY). On a monthly basis, both exports and imports recorded a decline. However, the decline in imports (-10.8%; Jan: -0.4%) outpaced exports (-7.9%; Jan: -10.3%), consequently resulting in a wider trade surplus of RM19.8bn (Jan: RM18.6bn).

In terms of major export markets, growth strengthened to ASEAN (+20.1% YoY; Jan: +19.5% YoY), EU (+18.5% YoY; Jan: +15.0% YoY) and Japan (+15.9% YoY; Jan: +11.6% YoY) following strong E&E exports. Meanwhile, softer exports growth was seen to US (+4.1% YoY; Jan: +17.6% YoY) and China (+19.2% YoY; Jan: +29.7% YoY).

Manufactured exports (+21.4% YoY; Jan: +24.8% YoY) and commodity-related exports (+2.4% YoY; Jan: +20.7% YoY) moderated during the month. Following this, manufactured exports contributed less to overall growth (+16.2ppt; Jan: +19.7ppt). E&E exports supported growth in this category (+25.8% YoY; Jan: +22.4% YoY), but was offset by moderation across manufacture of metals (+31.8% YoY; Jan: +56.9% YoY), chemicals (+28.2% YoY; Jan: +31.6% YoY), machinery, equipment & parts (+16.7% YoY; Jan: +36.5% YoY) and optical & scientific equipment (+12.5% YoY; Jan: +14.6% YoY).

Commodity-related exports contribution dropped to +0.6ppt (Jan: +4.2ppt). The acceleration in crude petroleum exports (+18.4% YoY; Jan: +5.2% YoY), which was driven by high average unit value growth (+64.4% YoY; Jan: +68.7% YoY) amid the surge in crude oil prices following increased geopolitical tensions, was offset by the moderation in palm oil products (+58.9% YoY; Jan: +106.7% YoY), LNG (+45.7% YoY; Jan: +71.9% YoY) and petroleum products (+9.6% YoY; Jan: +39.4% YoY). Rubber products (-59.3% YoY; Jan: -53.4% YoY) also continued to decline for the sixth consecutive month.

Meanwhile, the moderation in imports (+18.4% YoY; Jan: +26.7% YoY) was seen across capital (+4.4% YoY; Jan: +36.3% YoY), consumption (+18.3% YoY; Jan: +32.4% YoY) and intermediate goods (+21.8% YoY; Jan: +28.3% YoY). Growth was nevertheless supported by imports of electrical machinery, mechanical appliances and processed food and beverages mainly for household consumption, especially food preparations.

HLIB’s VIEW

High global commodity prices will continue to benefit Malaysia’s exports through higher export value. Nevertheless, the recent escalation in geopolitical tensions, persistent supply chain disruptions and high inflation pressures could weigh on demand and trade flows, which could adversely impact global growth and subsequently the domestic economy. Hence, we maintain our expectation for BNM to increase the OPR by 25bps in 4Q22.

Source: Hong Leong Investment Bank Research - 21 Mar 2022