Exports Rebounded to 13.6% Yoy in September

• Malaysia’s exports turned around and register a positive growth of 13.6% yoy in September (-2.9% in August)
• In the first nine months of 2020, the trade surplus amounted to RM125bn compared to RM108.8bn in Jan-Sept 2019.
• We project gross export growth to decline by 5.0% for 2020 (-0.8% in 2019), with gross imports contracting by 6.0% in 2020 (-3.5% in 2019).

Positive Growth in Exports Across Major Products in September

Malaysia’s exports turned around to register a strong growth of 13.6% yoy in September after declining by -2.9% in August, its highest yoy growth since October 2018. During the month, higher export growth was supported by the increase in manufactured exports, which turned around from -0.1% yoy in August to 16.3% in September, as reflected in higher demand for E&E products, such as telecommunications equipment, parts and accessories and thermionic valves, tubes and photocells products. Exports of other manufactured goods also expanded in September, with higher demand for machinery, equipment and parts, optical and scientific equipment, and palm oil and palm oil based products.

Similarly, exports of agriculture goods rose by 26.6% yoy in September (-4.5% in August), due to increase demand for palm oil and palm oil-based products. In contrast, exports of mining goods contracted by 27.4% yoy in September (-25.9% in August), due to decline in exports of liquefied natural gas (LNG), which fell by 52.2% yoy during the month. This was despite the increase in exports of crude petroleum of 22.2% yoy in September. For the first nine months of the year, growth in exports declined by 3.1% yoy (-0.1% in Jan-Sept 19), with growth in imports declining sharply by -6.3% yoy (-3.2% in Jan-Sept 19).

Higher Exports to Major Trading Partners, Especially ASEAN and China

In September, Malaysia’s exports to almost all its major trading partners expanded, especially strong demand from China. This was in tandem with the recovery in China’s economy in 2H20, where Malaysia’s exports to China rose sharply by 41.9% yoy in September (20.9% in August), supported by higher demand for iron and steel products, E&E products, palm oil and palm oil-based agriculture products. Exports to ASEAN countries also turned around by 6.7% yoy in September (-8.0% in August), due to higher exports of E&E products. Exports to the US rose for the fourth consecutive month by 22.1% yoy in September (13.6% in August), reflecting higher exports of E&E products, wood products, rubber products as well as machinery equipment and parts. Similarly, exports to the EU expanded by 28.6% yoy in September (-13.6% in August), led by increase in exports of E&E, rubber products, palm oil, palm oil-based agriculture products and manufactures of metal.

Source: Affin Hwang Research - 30 Oct 2020