Turnaround in Exports Led by Manufactured and Agriculture Goods

Malaysia’s exports rebounded by 2.7% yoy in December, a sharp turnaround from -5.5% in November, the first positive growth after four straight months of declines since July 2019. This was better than market expectations of a decline of 2.5%. The turnaround in export growth was led by the increase in exports of manufactured and agriculture goods.

Higher exports of manufactured goods were led by stronger demand for refined petroleum products, iron and steel products, optical and scientific equipment, transport equipment and machinery and appliances. However, exports of E&E products, which accounted for 35.9% of total exports, continued to contract for the fifth consecutive month by 5.4% in December (-11.6% in November) amid the decline in demand for electrical apparatus and parts (-1.0%), thermionic valves, tubes and photocells (-0.9%) as well as telecommunications equipment, parts and accessories (-0.6%). Exports of parts and accessories for office machines rose by 17.3% yoy in December from +3.7% in November. The smaller decline in Malaysia’s exports of E&E products during the month was also in tandem with global semiconductor sales, which declined by a slower pace of 5.5% yoy in December from -10.8% in November.

Exports of mining goods fell due to lower demand for liquefied natural gas (LNG) (-21.3%) and crude petroleum (-24.3%). As for agriculture exports, higher exports were supported by the turnaround in exports of palm oil and palm-oil based products, which rose by 34.2% yoy in December (-3.5% in November) possibly due to the higher CPO prices registered during the month.

Exports to US, China and ASEAN Rose in December

Malaysia’s exports to the US rose by a strong double digits in December to 15.1% yoy (6.5% in November), its highest growth since May 2017. Similarly, demand from China also posted a double-digit expansion of 17.8% yoy (+4.1% in November), its second consecutive month of positive growth and its strongest growth since October 2018.

As for ASEAN, exports rebounded by 3.2% yoy in December (-8.8% in November) after four consecutive months of contractions. In contrast, exports to the EU declined for the fourth straight month, albeit at a slower pace of 3.8% yoy in December compared to -4.3% in November. Meanwhile, exports to Japan also declined for the fourth month in a row, from -16% yoy in November to -13.9% in December.

Source: Affin Hwang Research - 5 Feb 2020