• Exports fell for the fourth straight month in September (-16.2% YoY; Aug: -21.2%), a bigger drop than consensus’ -13.5%, due to weak commodity prices, and subdued external demand
  
  − MoM: fell (-5.6%; Aug: 5.4%) to a five-month low.

• Export growth was mainly weighed by weak shipment of non-O&G products but supported by a rebound in O&G
  
  − Non-O&G (-17.7%; Aug: -21.3%): growth contracted for the fourth straight month due to a broad-based slowdown, led by weak mining (-41.9%; Aug: -33.3%), followed by agriculture (-15.0%; Aug: -30.0%) and manufacturing (-9.0%; Aug: -17.5%) products. By destination, weak demand was recorded across major trading partners, led by Japan (- 35.6%; Aug: -29.0%), followed by China (-15.9%; Aug: -12.9%) and the US (-13.1%; Aug: -17.7%).
  
  − O&G (11.6%; Aug: -20.7%) rebounded sharply for the first time in seven months due to a surge in manufacturing YoY growth (67.4%; Aug: 11.5%).

• Imports remained in a contraction (-12.5%; Aug: -14.8%) for the fourth straight month and sharply lower than consensus (-5.5%). Growth was mainly dragged by weak imports of non-O&G (-14.5%; Aug: -12.1%)
  
  − By category, it was a broad-based slowdown led by a decline in raw materials (-14.8%; Aug: -20.4%), followed by capital goods (-10.0%; Aug: -4.0%). Meanwhile, the import of consumer goods slowed sharply (4.7%; Aug: 15.5%).
  
  − MoM: growth contracted sharply (-8.1%; Aug: -3.5%) to a three-month low.

• Trade surplus widened to a three-month high (USD3.4b; Aug: USD3.1b), beating consensus (USD2.1b) as a contraction in imports outpaced exports on a MoM basis. Nevertheless, total trade fell for the fourth month (-14.5% YoY; Aug: -18.4%).

• 2023 export growth forecast retained at -9.3% (2022: 26.1%)
  
  − Year-to-date, exports fell by 12.3% YoY (YTD 2022: 33.5%), indicating a persistent weakness in external demand brought by the impact of the global economic slowdown partly attributed by a higher interest rate environment in the advanced economies as well as geopolitical factors. Nevertheless, we expect growth contraction in exports to ease in the coming months amid a gradual recovery in China’s economy while the higher base effect dissipates.

Source: Kenanga Research - 17 Oct 2023