● Export growth expanded for the third straight month in April (47.8% YoY; Mar: 44.4%), beating market expectations (consensus: 36.0%)

- MoM: growth slowed (3.1%; Mar: 29.4%) to USD27.3b, but a record high in value term.

● Growth accelerated, due to elevated commodity prices, higher shipment to Japan and partly due to base effect

- Non-O&G (47.7%; Mar: 43.8%): expanded for the third straight month due to a surge in export of mining (675.1%; Mar: 404.2%), followed by manufacturing (366.6%; Mar: 240.4%) and agriculture products (354.9%; Mar: 192.3%) as well as partly due to lower base effect. By destination, export of non-O&G to major trading partners was boosted by Japan (69.4%; Mar: 33.7%) but partially capped by the lower shipments to the US (20.9%; Mar: 36.8%) and China (39.8%; Mar: 47.1%).

- O&G (48.9%; Mar: 54.8%): growth moderated due to weak shipment of mining (-6.3%; Mar: 26.4%) but was partially capped by surging exports of manufacturing (625.3%; Mar: 186.9%) products.

● Imports moderated in April (22.0%; Mar: 30.8%), lower than market expectations (consensus: 35.0%) due to slowdown in import of non-O&G (12.5%; Mar: 27.3%) products

- Broad based slowdown across major group, led by raw materials (25.5%; Mar: 31.5%), followed by capital goods (15.2%; Mar: 30.1%) and consumer goods (4.2%; Mar: 25.7%).

- MoM: fell sharply (-10.0%; Mar: 32.0%) to USD19.8b, a two-month low in value term.

● Trade surplus widened (USD7.6b; Mar: USD4.5b) a record high, beating expectations (consensus: USD3.3b). However, total trade slowed (35.7% YoY; Mar: 37.9%) with MoM growth fell (-2.8%; Mar: 30.6%) to a three month low.

● Exports forecast revised to 28.6% from 7.6% (2021: 41.9%), banking on elevated commodity prices

- We revised the exports forecast to reflect the sustained expansion for the last four months. Nonetheless, we still expect growth to continue moderating in the 2H22 as the base effect dissipates and considers the impact of the COVID-19 and China’s zero-Covid policy on the global supply chain and demand. Nonetheless, the downside risk is expected to be limited as growth would be supported by higher commodity prices.

Source: Kenanga Research - 18 May 2022