Exports growth slowed to +6.0% YoY in Dec (Nov: +15.1% YoY), missing consensus estimate of +8.8% YoY. Growth was mainly buoyed by exports of petroleum products. Similarly, imports growth also moderated (+12.0% YoY; Nov: +15.6% YoY), following a decline in capital imports. The trade surplus widened to RM27.8bn (Nov: RM21.8bn).

DATA HIGHLIGHTS  

Exports growth slowed to +6.0% YoY in Dec (Nov: +15.1% YoY), missing consensus estimate of +8.8% YoY. Similarly, imports growth also moderated to +12.0% YoY (Nov: +15.6% YoY). On a monthly basis, exports grew (+1.7%; Nov: -1.5%) while imports continued to decline (-3.5%; Nov: -4.9%), resulting in a wider trade surplus of RM27.8bn (Nov: RM21.8bn).  

In terms of major export markets, slower exports growth was recorded to most markets across the board; Japan (+13.7% YoY; Nov: +31.6% YoY), ASEAN (+12.9% YoY; Nov: +16.9% YoY) and US (+7.9% YoY; Nov: +8.4% YoY). Meanwhile, exports to China sank (-12.1% YoY; Nov: +9.0% YoY). Stronger exports growth was seen only to EU (+20.1% YoY; Nov: +16.3% YoY).  

Manufactured exports moderated sharply during the month, offsetting the acceleration in commodity-related exports. Manufactured exports slowed to +2.1% YoY (Nov: +15.2% YoY), resulting in a smaller contribution of +1.6ppt (Nov: +11.7ppt) to overall growth. Growth was weighed down by the continued decline in manufacture of metals (-7.4% YoY; Nov: -26.3% YoY), albeit at a softer pace, coupled with softer exports in optical & scientific equipment (+10.5% YoY; Nov: +18.1% YoY), E&E (+4.7% YoY; Nov: +30.9% YoY), and chemical products (+0.1% YoY; Nov: +9.6% YoY). These offset the stronger exports growth in machinery, equipment & parts (+10.7% YoY; Nov: +2.7% YoY) during the month.  

Commodity-related exports growth picked up to +21.3% YoY (Nov: +14.6% YoY), consequently registering a larger contribution of +4.4ppt (Nov: +3.4ppt) to overall growth. This was large part due to the jump in petroleum product exports (+66.4% YoY; Nov: +26.4% YoY), which offset the continued decline in palm oil (-1.0% YoY; Nov: -14.0% YoY) and rubber exports (-42.4% YoY; Nov: -46.5% YoY). Meanwhile, slower exports growth was recorded for LNG (+33.5% YoY; Nov: +68.3% YoY), following softer export volume (+0.8% YoY; Nov: +10.2% YoY) and average unit value (AUV) (+32.4% YoY; Nov: +56.5% YoY). Similarly, crude petroleum also moderated (+46.3% YoY; Nov: +95.8% YoY), on account of softer export volume (+5.1% YoY; Nov: +37.0% YoY) and AUV growth (+39.1% YoY; Nov: +43.1% YoY).  

Meanwhile, imports growth slowed pace (+12.0% YoY; Nov: +15.6% YoY), dragged by a decline in capital imports (-2.2% YoY; Nov: +2.9% YoY), coupled with slower imports of intermediate (+7.1% YoY; Nov: +8.2% YoY) and consumption (+17.1% YoY; Nov: +23.9% YoY) goods.  

HLIB’s VIEW  

Global demand for goods and services is anticipated to further deteriorate this year as recessionary risks continue to darken the outlook of some of the largest world economies, particularly the US and EU, risking Malaysia’s trade performance. Nevertheless, China’s recent reopening and pent-up demand is expected to support trade activity, providing support for commodities, which will then benefit energy and commodity exporters like Malaysia.

Source: Hong Leong Investment Bank Research - 19 Jan 2023