Sharp Declines in Both Demand for Mining and Agriculture Goods

Malaysia’s export growth unexpectedly declined from 17.9% yoy in January to - 2% in February, the first negative growth since October 2016 and sharply below market expectations of 8%. The decline in exports growth was reflected almost across the board, led by the sharp decline in exports of mining goods, which contracted by 10.2% yoy in February (8.5% in January), followed by exports of agriculture goods, which fell significantly by 23.3% (6.2% in January). Exports of manufactured goods slowed sharply from 20.4% yoy in January to 1.5% in February, due to weak demand for electrical & electronic (E&E) products.

Exports of E&E products fell sharply from 27.2% yoy in January to -0.1% in February, the weakest yoy growth in 19 months, partly distorted by a shorter working month due to a seasonal factor (as Lunar New Year fell in February this year) as well as lower demand from major trading partners. The declines were reflected in exports of parts & accessories for office machines, telecommunication equipment, parts & accessories and electrical apparatus & parts. This was also in line with the sharp slowdown in global semiconductor sales, especially to China, where according to Semiconductor Industry Association (SIA), sales slowed from 22.7% yoy in January to 20.9% in February, albeit maintaining double-digit growth for 15 consecutive months.

Exports in other manufactured products also slowed, including chemicals & chemical products, which declined by 3.4% yoy in February (23.4% in January) and machinery & appliances (-6.1% yoy in February vs +10.3% in January). However, exports of petroleum products increased sharply by 22.5% yoy in February (-0.1% in January), which partly contributed to still-positive growth in the exports of manufactured products.

Source: Affin Hwang Research - 6 Apr 2018