• Malaysia’s exports rose by 17.6% yoy in February (6.6% in January), led by exports of manufactured and agriculture goods
• Gross imports expanded for the third consecutive month by 12.7% yoy in February from 1.3% in January, led mainly by imports of consumption and capital goods
• In 2021, we believe export growth will recover and expand at a rate of 6.5- 7.0% yoy (-1.4% in 2020), compared with import growth of 7.0-7.5% yoy (-6.3% in 2020).

Demand for manufactured and agriculture products lifted exports in February

Malaysia’s exports rose sharply by 17.6% yoy in February from 6.6% in January, its sixth consecutive month of positive growth since August 2020. This was also at its fastest pace since October 2018. Apart from base effect, the strong export growth in February was supported by increased in demand for manufactured and agriculture goods. Exports of manufactured goods rose by 20.1% yoy in February from 11.7% in January, while exports of agriculture goods increased by 9.7% yoy in February (7.2% in January). In contrast, exports of mining goods contracted at a slower pace of 7.8% from -31% in January.

The increase in exports of manufactured goods was reflected in exports of electrical and electronic (E&E) products, which expanded by +25.5% yoy, with higher demand for E&E products underpinned by the rise in demand for semiconductors for smart devices, 5G network and automotive industry amid the recovery in global economic activities. Exports of rubber products remained robust in February with a growth of 188.7% yoy, its sixth straight month of triple-digit expansion. Other exports of manufactured goods that increased during the month were manufactures of metal (+27%), chemical and chemical products (+20.3) and petroleum products (+32.1%). In contrast, optical and scientific equipment (-0.3%), wood products (-3.7%), transport equipment (-8.7%) and machinery and appliances (-0.2%) declined in February.

Meanwhile, exports of agriculture goods were supported by higher exports of palm oil and palm oil-based products, which rose by 10.7% yoy in February. In contrast, the continued decline in exports of mining goods was due to lower exports of liquefied natural gas (-17%) and crude petroleum (-24.3%).

Exports to All Major Export Markets Increased in February

Exports to China rose by 35.8% yoy in February for the eleventh month in a row from 26% in January, supported by higher demand for E&E products, petroleum products and LNG. Similarly, exports to the US rose for the ninth consecutive month by 26% yoy in February from 18.4% in January led by increased exports of rubber products. Meanwhile, exports to the EU also expanded for the sixth consecutive month by 15.3% yoy in February from 11.4% in January mainly due to higher demand for rubber products.

Source: Affin Hwang Research - 30 Mar 2021