Export Growth of E&E Products Turned Positive in July

Malaysia’s export growth rebounded to 1.7% yoy in July, a turnaround from a decline of 3.4% in June and significantly higher than market expectations of -2.5%. Exports of manufactured goods rose sharply by 3.8% yoy in July (-5.0% in June), which cushioned the declines in both exports of mining and agriculture goods. Exports of mining goods contracted sharply by 11.6% yoy in July (+15.4% in June), while demand for agriculture goods also contracted by 9.3% yoy in July, following a 0.8% decline in June.

The sharp turnaround in exports of manufactured goods was reflected in stronger demand for electrical and electronics (E&E) products, iron and steel products, processed food, machinery, equipment and parts as well as transport equipment. In particular, exports of E&E goods, which accounted for 41% of total exports, increased by 4.5% yoy in July, after declining sharply by 6.0% in June. Higher E&E exports were due to sustained demand for telecommunication equipment, parts and accessories (27%) and a turnaround in thermionic valves & tubes (11.2%). Other manufactured goods, which also registered positive growth, were chemicals and chemical products (1.9%), liquefied natural gas (31.3%), petroleum products (2.8%), and machinery and appliances (6%). However, the declines were reflected in exports of crude petroleum (-45.7%), palm oil (-11.8%), optical and scientific equipment (-2.3%) and manufactures of metal (-4.1%) during the month.

The decline in exports of mining goods was due to exports of crude petroleum, weighed down by the lower volume and Average Unit Value (AUV). Meanwhile, the lower demand for agriculture goods was due to weak exports of palm oil and palm oil-based agriculture products, especially palm oil which contracted by 14.2% yoy amid a lower AUV.

Higher Exports to China, the US and ASEAN in July

By country, Malaysia’s exports to ASEAN turned around by growing 1.8% yoy in July after contracting by 0.2% in June, amid higher exports of E&E products, machinery, equipment and parts, iron and steel products and LNG. Similarly, exports to China rebounded by 3.8% yoy in July (-12% in June), ending its three consecutive months of negative growth and also registering its fastest growth since March 2019 led by increased demand for manufactures of metal, petroleum products and LNG.

Exports to the US expanded by 7.9% yoy in July, albeit lower than 8.8% in June, supported by the increase in exports of E&E products, wood products, transport equipment and manufactures of plastics.

Source: Affin Hwang Research - 5 Sept 2019