• Malaysia’s export growth rose by 6.6% yoy in January (10.8% in December), led by exports of manufactured goods
• Gross imports rose for the second consecutive month but at a slower pace of 1.3% yoy in January from 1.6% in December, due to imports of consumption goods and intermediate goods
• In 2021, we believe that exports will recover at a growth rate of 6.5-7.0% (- 1.4% in 2020), compared with growth in imports of 7.0-7.5% (-6.3% in 2020).

Positive export growth driven mainly by higher exports of manufactured goods

Growth in Malaysia’s exports rose by 6.6% yoy in January 2021, albeit at a slower pace than 10.8% in December, remaining in positive territory for the fifth consecutive month since August 2020. Higher export growth in January was supported mainly by increased demand for manufactured goods. Exports of manufactured goods rose by 11.7% yoy in January from 12.4% in December. In contrast, exports of agriculture goods fell by 7.2% yoy in January from an expansion of 47.1% in December. Meanwhile, exports of mining goods contracted and registered a large double-digit decline of 31% in January, similar to its contraction level in December.

Sustained expansion in exports of manufactured goods was due to the increase in exports of electrical and electronic products (+13.1%), where the increase in demand for E&E products was underpinned by the rise in demand for various electronic products, especially in the automotive industry, 5G network and smart devices. Exports of rubber products also surged in January by 187.4% yoy, its fifth straight month of triple-digit expansion. Other exports of manufactured goods that increased during the month were manufactures of metal (+19.9%), chemical and chemical products (+10.6%), optical and scientific equipment (+9.9%), wood products (+2.1%) and transport equipment (+4.9%). In contrast, exports of petroleum products (-32.4%) and machinery and appliances (-1.4%) declined in January.

In contrast, exports of agriculture goods were weighed down by lower exports of palm oil and palm oil-based products, which fell by 10.9% yoy in January. Likewise, the decline in exports of mining goods was due to weak exports of liquefied natural gas (-40.0%) and crude petroleum (-31.9%).

Rise in Exports to All Major Export Markets Except for Japan

Exports to China rose for the tenth straight month by 26% yoy in January from 13.5% in December, supported by higher demand for E&E products, iron and steel as well as other manufactures namely solid-state storage devices (SSD). Similarly, exports to the US rose for the eighth consecutive month by 18.4% yoy in January from 18.2% in December led by increased exports of rubber products, wood products as well as optical and scientific equipment. Meanwhile, exports to the EU also expanded for the fifth consecutive month by 11.4% yoy from 14.4% in December amid higher demand of rubber products.

Source: Affin Hwang Research - 1 Mar 2021