Exports Growth Was Weighed Down by Demand for Manufactured Goods

Malaysia’s export contracted by 5.3% yoy in February from 3.1% increase in January, sharply lower than market expectations of 2.3% growth. February’s export growth was reflected in broad-based declines across major sectors, partly due to Lunar New Year holidays during the month. In particular, export of manufactured goods, which contributed 83.8% of total exports, declined sharply by 4.3% yoy in February (2.9% in January). Exports of mining and agriculture sectors also declined by 5.5% yoy and 13.7% yoy respectively during the month.

The exports growth of electrical and electronic products, which attributed 38.8% of total exports, slowed to 4.9% yoy in February, after rising by 8.2% in January. The slowdown was due mainly to lower demand for electrical apparatus and parts (-3.1%) as well as further decline in parts and accessories for office machine (-28.1%). However, exports of telecommunications equipment, parts and accessories (16.4%), thermionic valves & tubes and photocells (6.1%) and other E&E products (4.8%) rose during the month. Other manufactured products, which also registered declines were petroleum products (-32.6%), manufactures of metal (-19.0%) and optical and scientific equipment (-17.4%).

Exports of mining good declined in February due to by lesser demand for crude petroleum, which fell 21.8% yoy, due to both lower volume and Average Unit Value (AUV), despite the rise in exports for liquefied natural gas (LNG) as well as petroleum condensates and other petroleum oil. Meanwhile, exports of palm oil declined sharply by 11.4% due to lower AUV.

Decline in Exports to Major Trading Partners

The performance of exports to Malaysia’s main trading partners declined in February except for EU. Malaysia’s export to EU rose for the second consecutive month and recorded an increase of 3.7% yoy in February (4.3% in January). Nevertheless, exports to China declined by 1.6% yoy, after rising by 9.1% in January, due to lower demand for optical and scientific equipment, petroleum products and metalliferous ores and metal scrap. At the same time, Malaysia’s exports to the US declined by 8.9% yoy (9.4% in January), due to lower demand for manufactures of metal, transport equipment as well as optical and scientific equipment. Similarly, exports to Japan and ASEAN region contracted by 2.9% yoy and 7.8% respectively (-5.0% and 3.4% in January). Exports to Japan declined for fourth months in row, albeit smaller negative growth as compared to January. The decline was underpinned by lower exports of LNG, but demand for manufactured goods, such as manufactures of metal, wood products and iron and steel products from Japan recovered in February.

Source: Affin Hwang Research - 5 Apr 2019