• Exports fell for the sixth straight month in November (-8.6% YoY; Oct: -10.4%), better than consensus (-9.4%)

− MoM: fell slightly (-0.7%; Oct: 6.7%).

• Non-oil and gas (O&G) exports remained weak, but higher O&G shipments continue to support export growth

− Non-O&G (-9.8%; Oct: -11.4%): growth contracted for the sixth straight month due to a persistent slowdown led by mining (-27.5%; Oct: -28.6%), followed by agriculture (-11.5%; Oct: -21.2%) and manufacturing (-3.5%; Oct: -5.1%) products. By destination, shipment to major trading partners remained weak, led by Japan (-23.9%; Oct: -24.9%), followed by China (-13.9%; Oct: -7.4%) and the US (-7.5%; Oct: -11.8%).

− O&G (16.4%; Oct: 6.4%): expanded sharply for the third straight month, attributable to solid manufacturing growth (39.9%; Oct: 49.9%) and a sharp rebound in mining (9.7%; Oct: -8.3).

• Import growth rebounded (3.3%; Oct: -2.4%), after five straight month of contraction, exceeding expectations (consensus: 0.2%), with notable sharp rebound of O&G import (24.4%; Oct: -4.7%)

− By category, growth was supported by a broad-based expansion led by consumer goods (19.8%; Oct: 3.8%), and capital goods (13.7%; Oct: 11.1%), as well as a smaller contraction recorded in raw materials (-1.0%; Oct: -6.1%).

− MoM: growth moderated (4.9%; Oct: 7.7%) but remained positive for the second month.

• Trade surplus narrowed to a four-month low (USD2.4b; Oct: USD3.5b), below consensus (USD3.1b) due to rising import and declining exports. Nevertheless, total trade continues to weaken, dropping for the sixth straight month (-3.3% YoY; Oct: -6.9%), albeit at a smaller rate of contraction.

• 2023 export growth is likely to settle around our forecast of -11.5% (2022: 26.1%)

− Year-to-date, exports fell by 11.8% YoY (YTD 2022: 28.1%). The decline is due to last year high base effect, persistent weakness in external demand amidst higher interest rate environment in advanced economies, escalating geopolitical tensions, and China’s fragile post-pandemic recovery. However, we expect a near-term easing in the export growth contraction and modest recovery in China’s economy. Consequently, we project a slight increase in exports to 0.8% in 2024.

Source: Kenanga Research - 18 Dec 2023