● Exports moderated to 20.7% YoY in April (Mar: 25.3%), but beating expectations (KIBB: 10.6%; consensus: 19.9%)

• MoM (-3.1%; Mar: 28.6%): growth fell after a sharp rebound in the previous month, reflecting a weak recovery in the trade activity attributable to heightened external pressures amid China’s lockdown measures, and the Russia-Ukraine crisis.

● Lower exports due to weak shipment of key sectors and to some key trading partners

• By destination: mainly due to weak shipment to SG, which slowed sharply (9.1%; Mar: 34.0%), but was partially mitigated by growth expansion to EU (30.5%; Mar: 17.7%), the US (18.1%; Mar: 10.2%) and CN (12.4%; Mar: 10.7%) as well as partly due to base effect.
• By sector: broad-based slowdown, led by mining (64.6%; Mar: 105.8%), followed by agriculture (29.9%; Mar: 41.2%) and manufacturing (17.2%; Mar: 19.1%).

● Imports slowed to 22.0% in April (Mar: 29.9%), beating house forecast (16.0%) but lower than consensus (23.2%) due to sharp moderation in re-exports (16.8%; Mar: 37.9%) and retained imports (23.6%; Mar: 27.6%)

• By category, it was a broad-based slowdown led by intermediate goods (28.1%; Mar: 35.0%), and followed by consumption goods (9.7%; Mar: 22.3%), while capital goods fell (-2.4%; Mar: 13.5%), lowest since April 2021.
• On a MoM basis, growth fell marginally (-0.9%; Mar: 27.2%).

● Trade surplus narrowed to RM23.5b (Mar: RM26.6b), but beating expectations (KIBB: RM17.9b; consensus: RM22.3b) as MoM decline in exports (-3.1%) exceed imports (-0.9%). Meanwhile, total trade slowed to 21.3% YoY (Mar: 27.3%).

● 2022 exports growth forecast retained at 6.9% (2021: 26.0%) for now

• Despite stronger than expected export performance in the first four months of this year (Jan-Apr: 21.8% YoY), we retained our outlook that exports will moderate in the coming months as the base effect dissipates and trade activity normalises. This also considers several downside risks to growth, including the Russia-Ukraine crisis, the uncertainty of COVID-19 development, and China’s zero-Covid policy.
• Nonetheless, the adverse effect is expected to be limited given Malaysia’s export diversification, elevated commodity prices, and robust demand from major trading partners. Likewise, we maintain 2022 GDP growth at 5.0% - 5.5% (2021: 3.1%).

Source: Kenanga Research - 20 May 2022