Exports Growth Supported by Strong Demand for E&E Products

Malaysia’s exports rose by 4.8% yoy in December from 1.6% in November, higher than market expectations of a 1.3% increase. The rise in exports was supported by strong demand for electrical and electronic (E&E) products, which accounted for 39.4% of total exports, and returned to positive territory in December with a double-digit expansion of 14.2% yoy (-1.7% in November).

Export growth of E&E products was led by higher demand for telecommunications equipment, parts and accessories (16.2%), electrical apparatus and parts (2.5%), thermionic valves & tubes and photocells (19.6%). This had managed to outweigh the continued decline in parts and accessories for office machines (-30.6%). Other export of manufactured goods which registered increases were machinery and appliances (7.6%) and chemicals and chemical products (36.6%) and optical and scientific equipment (14.6%). In contrast, export of other manufactured goods declined, such as manufactures of metals (-5.5%) and refined petroleum products (-18.4%).

As for exports of mining goods, positive increases were registered for crude petroleum, albeit at a slower pace of 17.5% yoy in December, compared to 17.7% in November. However, exports of liquefied natural gas (LNG) declined by 2.7% following two consecutive months of double-digit growth (the first time since August 2018).

Meanwhile, exports of agriculture goods, such as palm oil and palm-oil based agriculture products continued to contract sharply by 27.2% yoy in December compared to -21.1% in November, due partly to lower demand from China.

Strong Exports to the US and ASEAN in December

Malaysia’s exports to ASEAN countries expanded for the second consecutive month in December to 7.3% yoy from 6.4% in November, while demand from the US turned around to register a double-digit growth of 13.5%, after a decline of -2.7% in November, its largest expansion since October 2017, due to demand for E&E related products.

However, exports to China declined for the first time since September by -0.5% yoy in December from 3.9% in November, reflecting weaker business conditions across the Chinese manufacturing sector. Demand from EU and Japan also remained weak, declining for the second straight month by 4.9% and 6.4%, respectively (-7.7 and -8.9%, respectively).

Source: Affin Hwang Research - 31 Jan 2019