● Exports jumped by 63.0% YoY in April (Mar: 31.0%), its strongestgrowthsince February1998, and beat expectations (KIBB: 58.7%; consensus 50.0%)

- MoM (0.6%; Mar: 19.8%): growth expanded marginally.

● Higher export growth wasmainlyassociated tobase effectand continued demand from major trading partners

- By destination: Led by the US (128.6%; Mar: 67.5%), followed byEU (85.4%; Mar: 45.9%),and SG (55.1%;Mar: 32.1%). Meanwhile growth to CN (28.0%; Mar: 48.6%) moderated sharply.

- By sector: Underpinned by sharp expansion in agriculture sector (66.9%; Mar: 43.8%) followed by manufacturing (65.5%; Mar: 35.9%) and a rebound in mining (24.5%; Mar: -24.1%).

● Importsaccelerated to a 47-month high (24.4%;Mar:19.2%),higherthanexpectations(KIBB:21.2%; consensus:17.8%) driven by continued expansion in retained imports (29.5%; Mar: 24.4%)

- Attributable to a record high expansion in intermediate goods (64.4%; Mar: 12.4%) followed by higher import of consumption goods (29.9%; Mar: 13.0%). Meanwhile, capital goods fell sharply (38.2%; Mar: 93.3%) on a high base effect.

● Trade surplusnarrowedto RM20.5b (Mar: RM24.2b) a tad higher than house forecast (RM20.2b) and beat market expectation (RM18.2b), as MoM imports (5.4%) outpaced exports (0.6%). Meanwhile, total trade expanded sharply (43.2%; Mar: 25.6%), highest since Feb 1998 on continued trade activities.

● Exports forecast retained at 11.8% (2020: -1.4%) on base effect and external demand recovery

- We continue to expect higher trade growth in the near term, mainly due to the low base effect in 2020, along with continued demand from major trading partners on the back of their economic recovery.

- Nonetheless, we pencil in a cautious outlook to our growth forecast as the recent COVID-19 resurgence both domestically and regionally may disrupt the manufacturing activities and supply chain due to the movement restriction imposed to contain the spread of the virus. Consequently, we have adjusted our 2021 GDP growth forecast to a range of 6.0-6.5% from 6.5% (2020: -5.6%).

Source: Kenanga Research - 31 May 2021