• Exports rose 10.8% YoY in December (Nov: 4.6%), a threemonth high andbeating expectations(KIBB:6.6%; consensus: 3.6%) on continued recovery of external demand
  • MoM (13.1%; Nov: -7.0%): rebounded sharply to a fourmonth high.
  • 4Q20 (5.1%; 3Q20: 4.4%): expanded to an eight-quarter high.
  • 2020 (-1.4%; 2019: -0.8%): fell to an 11-year low reflecting the impact of COVID-19 pandemic on external demand.
• Expansion in exports was driven by higher shipments to the EU and regional peers, mainly China, SG, and HK, as well asthe lower base effect from a year ago
  • EU (14.5%; Nov: 7.2%), China (13.5%; Nov: 13.2%) andHK (30.1%; Nov: 27.4%) rose to a three-month high, while SG (19.0%; Nov: 16.0%) surged to a 10-month high.
• Imports rebounded for the first time in 10 months (1.6% YoY; Nov:-9.0%), beating expectations (KIBB:-2.9%; consensus:-6.7%) driven mainly by an expansion in re-exports (22.9%; Nov: 18.0%) andsmallerdecline of retained imports (-3.6%; Nov:-14.7%)
  • The positive performance was attributable to a broad-based improvement across segments led by consumption goods (3.3%; Nov: -7.2%) and a smaller decline in both capital goods (-2.0%; Nov: -26.6%) and intermediate goods (-5.0%; Nov: -10.6%).
• Trade surplus expanded to RM20.7b (Nov: RM17.1b) a tad higher than house and market projectionof RM20.4b, as MoM exports rebounded sharply (13.1%) compared to imports (11.0%)
• Exportsgrowthis projectedto rebound by 6.0% in 2021 (2020: -1.4%) as the global economy gradually recovers from the impact of COVID-19 and recovery in commodity prices
  • While the recent resurgence of the COVID-19 pandemic in domestic and key trading partners may undermine growth recovery in the immediate term, we expect the impact to exports would be less severe than the preceding year on the back of continued improvement in demand for manufacturing goods especially electrical and electronics goods (Nov: 23.6%) and commodities.
  • Meanwhile, we have revised the 4Q20 GDP forecast to -2.5% from -1.7% (3Q20: -2.7%), reflecting the impact of the new wave of COVID-19 despite improvement in the export component. Consequently, the 2020 GDP growth is expected to settle at -5.3% (2019: 4.3%) before rebounding to a projected 3.9% in 2021.

Source: Kenanga Research - 2 Feb 2021