Exports growth gathered momentum in Nov (+15.6% YoY; Oct: +14.9% YoY), exceeding consensus estimate of +13.7% YoY. Growth was mostly underpinned by E&E products exports. Meanwhile, imports growth continued to moderate to +15.6% YoY (Oct: +29.1% YoY), following softer imports of intermediate and capital goods. The trade surplus widened to RM22.3bn (Oct: RM18.1bn).

DATA HIGHLIGHTS

Exports growth gathered momentum in Nov (+15.6% YoY; Oct: +14.9% YoY), exceeding consensus estimate of +13.7% YoY. Meanwhile, imports continued to moderate to +15.6% YoY (Oct: +29.1% YoY). On a monthly basis, the decline in imports (-4.9%; Oct: +1.0%) outpaced that of exports (-1.0%; Oct: -8.8%), resulting in a wider trade surplus of RM22.3bn (Oct: RM18.1bn).

In terms of major export markets, stronger exports growth was recorded to most major markets across the board; Japan (+31.6% YoY; Oct: +25.7% YoY), EU (+16.3% YoY; Oct: +6.9% YoY), US (+11.8% YoY; Oct: +8.8% YoY), and China (+9.2% YoY; Oct: +4.3% YoY). Meanwhile, exports to ASEAN (+16.9% YoY; Oct: +25.3% YoY) slowed pace. Growth was mainly driven by higher demand for E&E products and LNG.

Manufactured exports accelerated during the month (+15.8% YoY; Oct: +6.4% YoY), offsetting the slower commodity-related exports (+14.8% YoY; Oct: +44.5% YoY). Following this, manufactured exports contributed a higher +12.1ppt (Oct: +5.0ppt) to overall growth. Stronger exports growth was recorded for E&E products (+32.1% YoY; Oct: +19.0% YoY), optical & scientific equipment (+18.0% YoY; Oct: +13.7% YoY), chemical products (+9.9% YoY; Oct: +0.3% YoY), as well as for machinery, equipment & parts (+3.6% YoY; Oct: +1.8% YoY). Meanwhile, exports of manufacture of metals saw a softer decline (-26.3% YoY; Oct: -41.4% YoY).

Commodity-related exports moderated sharply to +14.8% YoY (Oct: +44.5% YoY), consequently registering a lower contribution of +3.5ppt (Oct: +9.9ppt) to overall growth. Growth was weighed down by a steeper drop in palm oil exports (-14.0% YoY; Oct: -10.1% YoY), following further declines in both export volume (-8.9% YoY; Oct: -4.3% YoY) and average unit value (AUV) (-20.6% YoY; Oct: -0.6% YoY). Growth was also dragged lower by slower exports of LNG (+69.5% YoY; Oct: +127.8% YoY) and crude petroleum (+96.0% YoY; Oct: +103.2% YoY), amid softer export volumes and average unit values. Similarly, petroleum products exports also recorded a moderation (+26.4% YoY; Oct: +80.9% YoY), while rubber exports continued to decline (-46.5% YoY; Oct: -45.7% YoY).

Meanwhile, imports growth moderated to +15.6% YoY (Oct: +29.1% YoY), following slower imports of intermediate (+8.2% YoY; Oct: +26.4% YoY) and capital goods (+3.2% YoY; Oct: +41.2% YoY). These offset the slight pickup in consumption imports (+23.6% YoY; Oct: +21.6% YoY).

HLIB’s VIEW

On the global front, the World Trade Organization Goods Trade Barometer index sunk below trend to 96.2 in its Nov release (previous: 100.0; baseline: 100.0), weighed down by negative readings of export orders, air freights and electronic components. This suggests that trade growth is likely to slow moving into 2023, amid ebbing business sentiment and weaker global import demand. In line with this, Malaysia’s positive trade performance is also expected to moderate in coming months, constrained by the weaker external environment.

Source: Hong Leong Investment Bank Research - 20 Dec 2022