Exports eased but remained robust at +30.1% YoY in Sep (Aug: +48.1% YoY), however slightly missing consensus estimate of +31.5% YoY. Growth was mainly supported by E&E, petroleum and LNG exports. Imports growth also moderated to +33.0% YoY (Aug: +67.3% YoY), following softer imports of intermediate and consumption goods. The trade surplus widened to RM31.7bn (Aug: RM17.0bn).

DATA HIGHLIGHTS

Exports eased but remained robust nonetheless at +30.1% YoY in Sep (Aug: +48.1% YoY), however slightly missing consensus estimate of +31.5% YoY. Imports also moderated to +33.0% YoY (Aug: +67.3% YoY). On a monthly basis, exports rose (+2.2%; Aug: +5.4%) while imports declined (-9.4%; Aug: +4.8%), resulting in a wider trade surplus of RM31.7bn (Aug: RM17.0bn).

In terms of major export markets, softer exports growth was recorded to most major markets; US (+32.5% YoY; Aug: +38.1% YoY), ASEAN (+31.5% YoY; Aug: +60.4% YoY), EU (+19.0% YoY; Aug: +30.7% YoY), as well as China (+8.0% YoY; Aug: +21.3% YoY). Meanwhile, exports to Japan (+74.6% YoY; Aug: +41.5% YoY) strengthened, supported by LNG, E&E and petroleum products.

Both manufactured exports (+25.4% YoY; Aug: +38.8% YoY) and commodity-related exports (+45.9% YoY; Aug: +78.4% YoY) moderated during the month. Following this, manufactured exports contributed less to overall growth at +19.6ppt (Aug: +29.6ppt). Growth was dragged by softer exports in E&E (+39.8% YoY; Aug: +49.4% YoY), optical & scientific equipment (+32.2% YoY; Aug: +44.0% YoY), machinery, equipment & parts (+28.9% YoY; Aug: +42.2% YoY), as well as chemical products (+14.5% YoY; Aug: +15.2% YoY). Meanwhile, exports of manufacture of metals posted a decline (-26.6% YoY; Aug: +8.4% YoY).

Commodity-related exports also slowed, resulting in a smaller contribution to overall growth (+10.6ppt; Aug: +18.5ppt). The slower growth was attributed to a sharp moderation in petroleum products (+83.3% YoY; Aug: +180.3% YoY). Similarly, softer growth was recorded for crude petroleum (+74.3% YoY; Aug: +106.3% YoY) and palm oil products (+6.4% YoY; Aug: +47.7% YoY), following decreases in export volume growth despite still-high average unit values (AUV). Meanwhile, rubber products continued to decline (-45.7% YoY; Aug: -50.2% YoY), albeit at a slower pace. These offset the stronger LNG exports growth (+142.0% YoY; Aug: +72.9% YoY) driven by higher export volume (+38.1% YoY; Aug: +10.3% YoY) and AUV growth (+75.2% YoY; Aug: +60.6% YoY), underlining the strength of demand going into peak winter season amid shortages from Russia gas.

Meanwhile, imports growth also moderated (+33.0% YoY; Aug: +67.3% YoY) following softer growth of intermediate (+35.1% YoY; Aug: +56.1% YoY) and consumption (+28.2% YoY; Aug: +42.2% YoY) imports. These offset the stronger capital imports growth (+30.5% YoY; Aug: +22.0% YoY).

HLIB’s VIEW

Malaysia’s strong trade momentum is expected to slow moving into the end of the year, as is seen in other regional countries, constrained by uncertainties on the global landscape including weaker economic growth in Europe, further tightening of global monetary policies, and a sluggish recovery in China. Nevertheless, Malaysia’s trade performance is still anticipated to be supported by its diversified export structure which includes manufactured and commodity goods. We maintain our 2022 GDP forecast at +6.5% YoY.

Source: Hong Leong Investment Bank Research - 20 Oct 2022