Sharper Decline in Exports Across All Major Products in May

Malaysia’s exports declined by 25.5% yoy in May, a sharper contraction when compared to -23.8% in April and despite the end of movement control order (MCO) period from 18 March to 3 May, where the country’s economy was most affected by closures of factories. We had expected a smaller contraction rate during the month, as during the conditional MCO (CMCO), from 4 May to 9 June, the economy was operating at higher capacity with the reopening of various sectors and businesses/factories. The continue sharp decline in exports in May could be attributed to global supply disruptions from containment and mitigation measures in other major countries, affecting demand for Malaysia’s products.

The decline in exports was reflected in the sharp decline in demand for manufactured goods (-23.5%), mining goods (-49.1%) and agriculture goods (-21.3%) during the month. Manufacturing exports were dragged down by the decline in E&E products, which contracted by 19.9% yoy in May (-21.7% in April) due to weak demand for telecommunications equipment, parts and accessories (-10.4%) and thermionic valves, tubes and photocells (-18.7%). Exports of other manufactured goods remained weak, such as manufactures of metal (-35.4%), machinery, equipment and parts (-29.6%), optical and scientific equipment (-11.3%) and chemical and chemical products (-24.2%). In contrast, exports of rubber products increased for the second consecutive month by 20.5% yoy in May compared to 11.7% in April, see Fig 1

Source: Affin Hwang Research - 30 Jun 2020