Exports surged by +25.4% YoY in Mar (Feb: +16.8% YoY), outperforming the consensus estimate of +10.4% YoY. Growth was largely contributed by E&E, petroleum products and palm oil exports. Meanwhile, imports also accelerated (+29.9% YoY; Feb: +18.3% YoY) following higher capital, intermediate and consumption imports. Consequently, the trade surplus widened to RM26.7bn (Feb: RM19.8bn).

DATA HIGHLIGHTS

Exports surged by +25.4% YoY in Mar (Feb: +16.8% YoY), outperforming the consensus estimate of +10.4% YoY. Imports also accelerated to +29.9% YoY (Feb: +18.3% YoY). On a monthly basis, both exports and imports rebounded strongly by +28.7% (Feb: -7.9%) and +27.3% (Feb: -10.9%) respectively. Consequently, the trade surplus widened to RM26.7bn (Feb: RM19.8bn).

In terms of major export markets, stronger exports growth was recorded to ASEAN (+37.8% YoY; Feb: +20.1% YoY), Japan (+30.6% YoY; Feb: +15.8% YoY) and US (+10.3% YoY; Feb: +4.0% YoY) on the back of strong E&E demand, while exports to EU (+18.1% YoY; Feb: +18.3% YoY) and China (+10.7% YoY; Feb: +19.2% YoY) eased.

Manufactured exports (+33.5% YoY; Feb: +21.4% YoY) accelerated during the month, contributing +18.4ppt to overall growth (Feb: +16.2ppt). This was led by E&E products (+32.8% YoY; Feb: +25.8% YoY) and optical & scientific equipment (+15.5% YoY; Feb: +13.8% YoY), which offset the moderation in machinery, equipment & parts (+14.5% YoY; Feb: +17.0% YoY), chemicals (+9.1% YoY; Feb: +28.3% YoY) and manufacture of metals (+3.5% YoY; Feb: +31.7% YoY).

Commodity-related exports also accelerated (+33.5% YoY; Feb: +2.5% YoY) amid an environment of elevated commodity prices, resulting in a larger contribution of +6.9ppt (Feb: +0.6ppt) to exports growth. Palm oil exports moderated but remained robust nonetheless (+55.9% YoY; Feb: +58.3% YoY), supported by higher average unit value (AUV) (+50.6% YoY; Feb: +41.3% YoY) and export volume (+12.3% YoY; Feb: +11.8% YoY). Exports of petroleum products jumped to +96.5% YoY (Feb: +9.6% YoY), while crude petroleum exports also surged (+92.5% YoY; Feb: +21.5% YoY), mainly due to a sharp increase in AUV (+79.6% YoY; Feb: +64.4% YoY). LNG exports increased by +100.5% YoY (Feb: +45.7% YoY) following high AUV (+68.1% YoY; Feb: +72.4% YoY) and export volume (+19.3% YoY; Feb: -15.5% YoY). Rubber exports continued to decline (-60.6% YoY; Feb: -59.2% YoY) owing to high base effect.

Meanwhile, imports accelerated (+29.9% YoY; Feb: +18.3% YoY) on the back of higher capital (+14.3% YoY; Feb: +4.3% YoY), intermediate (+34.9% YoY; Feb: +23.6% YoY) and consumption imports (+22.4% YoY; Feb: +18.2% YoY). The increase in intermediate imports was driven by fuels and lubricants, while consumption imports were primarily driven by processed food and beverages.

HLIB’s VIEW

As a net exporter of commodities, Malaysia will continue to benefit from this environment of high commodity prices. Nevertheless, prolonged supply chain disruptions as a result of lockdowns in China and the ongoing military conflict in Ukraine poses downside risks to production and trade activity, which could have adverse impacts on the global and domestic economy. Hence, we maintain our expectation for BNM to be patient and increase the OPR by 25bps in 4Q22.

Source: Hong Leong Investment Bank Research - 20 Apr 2022