Higher Exports of Agriculture Goods Supported Overall Exports

Malaysia’s export growth rose from 1.1% yoy in April to 2.5% in May, slightly higher than market expectations of 2.2%. Higher exports were supported by the improved demand for manufactured goods (3.1% yoy in May vs. 2.7% in April) as well as the increase in exports of agriculture goods, which turned around to 15.3% yoy in May from -9.3% in April. In contrast, exports of mining goods continued to stay in negative territory, with a sharper decline of 10.9% yoy from -1.5% in April. Higher exports of manufactured goods were led by demand for iron and steel products, machinery and appliances, equipment and parts, transport equipment, chemicals and chemical products as well as processed food. Nevertheless, export growth of electrical and electronics (E&E) products slowed to 0.5% yoy in May from 3.9% in April, mainly due to a decline in exports of parts and accessories for office machines (-8.5%) as well as easing demand for thermionic valves and tubes and photocells (2.0% in May and 6.9% in April). Meanwhile, strong exports of agriculture goods, which posted double-digit growth in May after fifteenth consecutive months of decline, were primarily underpinned by higher exports of palm oil and palm oil-based agriculture products.

Exports of mining goods continued to post negative growth in May, due to lower demand for crude petroleum and liquefied natural gas (LNG) products. Exports of crude petroleum declined by 20% yoy in May (-34.6% in April), marking the fourth consecutive month of double-digit decline. Likewise, exports of LNG fell by 5.2% yoy in May after increasing by 26.3% in April. The decline in export of both commodities was due to lower volumes.

Higher Exports to ASEAN and US in May

Malaysia’s exports to ASEAN rose by 4.7% yoy in May, marking the third consecutive month of increase (6.9% in April), led by higher exports of iron and steel products, machinery, equipment and parts, transport equipment, petroleum condensates, LNG and other petroleum oil. Meanwhile, exports to the US surged by double digits in May, rising by 11.7% yoy (3.1% in April), boosted by higher demand for E&E products, palm oil and palm oil-based agriculture products, wood products, rubber products, machinery, equipment and parts as well as manufactures of metal. Likewise, exports to Japan rose by 7.5% yoy in May (7.7% in April), supported by the increase in export of manufactures of metal, textiles, apparels and footwear, chemicals and chemicals products, transport equipment, crude petroleum as well as palm oil and palm oil-based agriculture products.

Source: Affin Hwang Research - 5 Jul 2019