Exports growth slowed to +1.6% YoY in Jan (Dec: +5.9% YoY), largely missing consensus estimate of +9.0% YoY. Growth was mainly buoyed by exports of petroleum products and LNG. Similarly, imports growth also moderated to +2.3% YoY (Dec: +11.5% YoY), following declines across the board. The trade surplus narrowed to RM18.2bn (Dec: RM28.1bn).

DATA HIGHLIGHTS

Exports growth slowed to +1.6% YoY in Jan (Dec: +5.9% YoY), largely missing consensus estimate of +9.0% YoY. Similarly, imports growth also moderated to +2.3% YoY (Dec: +11.5% YoY). On a monthly basis, both exports and imports declined. However, the decline in exports (-14.4%; Dec: +1.6%) outpaced that of imports (-8.6%; Dec: -4.0%), resulting in a narrower trade surplus of RM18.2bn (Dec: RM28.1bn).  

In terms of major export markets, softer exports growth was recorded to Japan (+13.2% YoY; Dec: +13.7% YoY), ASEAN (+10.7% YoY; Dec: +12.9% YoY), and EU (+1.4% YoY; Dec: +20.1% YoY). Growth to these markets was mainly supported by petroleum products and E&E. Meanwhile, exports to US (-0.6%; Dec: +7.8% YoY) and China (-11.9% YoY; Dec: -12.1% YoY) declined.  

Overall exports growth was supported by stronger commodity-related exports (+25.6% YoY; Dec: +21.3% YoY), which contributed +5.0ppt (Dec: +4.4ppt) to overall growth. This was led by petroleum products (+87.5% YoY; Dec: +66.4% YoY) and LNG exports (+62.3% YoY; Dec: +33.5% YoY), following positive export volumes and robust average unit values (AUV). Growth was also supported by exports of crude petroleum (+25.9% YoY; Dec; +40.0% YoY), albeit at a slower pace. Meanwhile, exports of palm oil posted a decline (-23.2% YoY; Dec: 0.0% YoY), following declines in both export volume (-11.2% YoY; Dec: +27.0% YoY) and AUV growth (-18.4% YoY; Dec: -26.7% YoY). Similarly, exports of rubber products also declined (-44.9% YoY; Dec: -42.1% YoY).  

Manufactured exports posted a downturn (-4.3% YoY; Dec: +1.9% YoY) during the month, thus contributing negatively to overall growth (-3.5ppt; Dec: +1.5ppt). The decline was attributed to lower exports of manufacture of metals (-34.9% YoY; Dec: -7.6% YoY), machinery, equipment & parts (-11.9% YoY; Dec: +10.1% YoY), as well as chemical products (-6.6% YoY; Dec: 0.0% YoY). Meanwhile, slower exports growth was also recorded for optical & scientific equipment (+6.6% YoY; Dec: +11.0% YoY), as well as for E&E products (+4.7% YoY; Dec: +4.8% YoY), in tandem with the downward trend in global semiconductor sales (-14.7% YoY; Nov: -9.2% YoY).  

Meanwhile, imports growth also moderated (+2.3% YoY; Dec: +11.5% YoY), dragged by declines across the board; capital goods (-1.7% YoY; Dec: -2.9% YoY), intermediate goods (-3.9% YoY; Dec: +6.4% YoY), as well as consumption goods (-4.7% YoY; Dec: +16.2% YoY).

HLIB’s VIEW

Malaysia’s trade momentum is expected to weaken going forward, constrained by the slowdown in final demand from major advanced economies. Nevertheless, the reopening of China’s economy and its potential spillover impact on commodity prices and diversification of Malaysia’s export is expected to provide some cushion to offset the slowdown.

Source: Hong Leong Investment Bank Research - 21 Feb 2023