Exports eased but maintained double-digit growth of +20.7% YoY in Apr (Mar: +25.3% YoY), surpassing consensus estimate of +19.9% YoY. Despite support from E&E and metals, exports growth was weighed by slowdown in commodityrelated exports following lower export volumes. Meanwhile, imports moderated to +22.0% YoY (Mar: +29.9% YoY) amid softer intermediate and consumption imports and decline in capital imports. The trade surplus narrowed to RM23.5bn (Mar: RM26.6bn).

DATA HIGHLIGHTS

Exports eased but maintained double-digit growth of +20.7% YoY in Apr (Mar: +25.3% YoY), surpassing consensus estimate of +19.9% YoY. Imports also softened to +22.0% YoY (Mar: +29.9% YoY). On a monthly basis, both exports and imports declined. However, the pace of decline of exports (-3.1%; Mar: +28.6%) outpaced that of imports (-0.9%; Mar: +27.2%), resulting in a smaller trade surplus of RM23.5bn (Mar: RM26.6bn).

In terms of major export markets, stronger exports growth was recorded to EU (+30.5% YoY; Mar: +17.7% YoY), US (+18.1% YoY; Mar: +10.2% YoY), and China (+12.4% YoY; Mar: +10.7% YoY) supported by higher exports of manufacturers of metal and E&E products, while exports to Japan (+22.1% YoY; Mar: +30.6% YoY) and ASEAN (+14.2% YoY; Mar: +37.8% YoY) eased.

Manufactured exports (+28.2% YoY; Mar: +23.2% YoY) accelerated during the month, contributing +20.7ppt to overall growth (Mar: +18.4ppt). This was led by manufacture of metals (+52.6% YoY; Mar: +3.5% YoY), chemicals (+33.1% YoY; Mar: +9.1% YoY) and machinery, equipment & parts (+18.8% YoY; Mar: +13.7% YoY), which offset the moderation in E&E products (+27.0% YoY; Mar: +32.9% YoY) and optical & scientific equipment (+13.0% YoY; Mar: +16.8% YoY).

Commodity-related exports slowed sharply to +0.1% YoY (Mar: +33.4% YoY), resulting in a drop in contribution to +0.03ppt (Mar: +6.9ppt). Despite higher average unit value recorded for all major commodity products, export volumes have declined, resulting in slower export growth for palm oil (+35.0% YoY; Mar: +55.2% YoY), LNG (+60.9% YoY; Mar: +100.5% YoY) and crude petroleum (+64.5% YoY; Mar: +92.5% YoY). The slowdown in commodity-related exports were also attributed to the decline in petroleum products (-4.0% YoY; Mar: +96.5% YoY) and rubber products (-59.6% YoY; Mar: -60.5% YoY) owing to high base effect.

Meanwhile, imports growth moderated (+22.0% YoY; Mar: +29.9% YoY) amid softer growth of intermediate (+28.1% YoY; Mar: +35.0% YoY) and consumption imports (+9.7% YoY; Mar: +22.3% YoY) and decline in capital imports (-2.4% YoY; Mar: +13.5% YoY). Intermediate imports were mostly supported by parts and accessories for electrical machinery, while consumption imports were supported by non-durables, particularly apparel and clothing.

HLIB’s VIEW

Prolonged supply chain disruptions as a result of tighter Covid-19 restrictions in China and ongoing geopolitical tensions continue to pose risks to manufacturing and trade activity. Nevertheless, Malaysia is still expected to maintain its positive export momentum given its diversified exports structure, supported by elevated global commodity prices and continuous demand for E&E products. We maintain our expectation for BNM to raise OPR by another 50bps in 2H22.

Source: Hong Leong Investment Bank Research - 20 May 2022