Export Growth Led by Higher Demand for Mining and E&E Goods

After slowing down to 14.8% yoy in September, Malaysia’s export growth rebounded sharply to 18.9% in October, which also exceeded market expectations of 17.3%. Apart from sustained exports of electronic and electrical (E&E) products, the better-than-expected growth was attributed mainly to higher exports of mining goods. In particular, exports of crude petroleum rebounded strongly by 62.9% yoy in October, after contracting by 4.9% yoy in the prior month. Both exports volume and average unit value rose significantly during the month. This was supported by a higher global crude oil price, which trended above the USD60 per barrel level in the final week of October.

However, exports of liquefied natural gas (LNG) slowed by 6.3% yoy in October (8.2% in September), due to a lower average unit value during the month. In the agriculture sector, exports of palm oil and palm-oil-based products reversed to positive growth of 7.9% yoy in October, after declining for two consecutive months (-1.7% in September). Similarly, exports of rubber products also rose by 30.6% yoy during the month (19.4% yoy in September).

As for exports of manufactured goods, exports of E&E products, which account for 37.7% of total exports, remained strong, expanding by 16.9% yoy in October, albeit slower than the 17.7% in September. The slowdown was underpinned by lower demand for parts and accessories for office machines (-24.1%), electrical apparatus and parts (-11.2%), as well as telecommunications equipment, parts and accessories (-1.6%). However, demand for thermionic valves, tubes and photocells, a main subcomponent under E&E products, remained strong, expanding by 28.9% yoy in October (21.9% in September). According to the Semiconductor Industry Association (SIA), global semiconductor sales continued to remain robust in the month of October, expanding by 21.9% yoy (22.2% yoy in September) due to higher sales from US and Europe markets. Exports of other manufactured products also showed strong growth in October, including optical/scientific equipment, which rose by 20.3% yoy, as well as chemicals/ chemicals products by 17.5% during the month. Other components, including machinery/appliances as well as the manufacturing of metal posted double-digit growth yoy of 14.3% and 38.0%, respectively.

Source: Affin Hwang Research - 7 Dec 2017