• Exports rebounded in January (8.7% YoY; Dec: -10.1%), far beating expectations (KIBB: 3.0%; consensus: 3.0%) marking positive growth for the first time since March 2023
  
  − MoM (3.4%; Dec: -2.8%): surprisingly rebounded, signalling a potential turnaround, as January typicallyexperiences weaker performance on a MoM basis.

• A relatively mixed performance among major trading partners, sectors and products
  
  − By destination: exports to major destinations exhibited mixed results. Notably, growth was boosted by a reboundin export to the US (11.9%; Dec: -5.3%), followed by the EU (6.4%; Dec: -25.5%) and Japan (2.8%; Dec: -4.7%).However, the growth was partially capped by sustained weakness in shipments to China (-7.4%; Dec: -1.5%) andSingapore (-2.6%; Dec: -25.0%).
  
  − By sector: attributable to the rebound in export of manufacturing (9.3%; Dec: -10.4%) and agriculture (17.5%;Dec: -25.9%) sectors, but was partially capped by subdued export of mining (-4.9%; Dec: 9.0%) sector.
  
  − By product: contributed by higher exports of petroleum products (24.2%; Dec: -22.2%), reaching a 10-month high.Nevertheless, the momentum was partially capped by the persistent weakness in export of electrical and electronics(E&E) product (-6.5%; Dec: -12.1%).

• Imports expanded sharply (18.8%; Dec: 2.9%), reaching a 15-month high, surpassing expectations (KIBB: 8.3%; consensus: 8.0%).
  
  − The expansion was driven by a surge in retained imports (24.6%; Dec: 10.9%) and a rebound in re-exports (4.1%;Dec: -20.3%).
  
  − By category: the strong growth was also attributable to a broad-based expansion, led by capital goods (41.8%;Dec: 23.7%), followed by consumption goods (25.46%; Dec: -0.7%) and intermediate goods (21.4%; Dec: 10.2%).
  
  − MoM (5.3%; Dec: -2.6%): growth rebounded, following two straight months of contraction.

• Trade surplus narrowed to a 44-month low at RM10.1b (Nov: RM12.2b), falling below expectations (KIBB: RM13.7b; consensus: RM14.0b) as imports rose more than exports
  
  − Meanwhile, total trade rebounded sharply (13.3%; Dec: -4.3%), ending a tenth straight month of decline.

• 2024 export growth forecast maintain at 9.4% (2023: -8.0%) based on the expectation of a turnaround in the export of E&E and a demand recovery from China
  
  − Despite projecting a growth rebound in 2024, we continue to remain cautious in our outlook due to the risinggeopolitical tensions, particularly in the Middle East, which could disrupt the global supply chain and subsequentlyweigh on global trade activities. A slower-than-expected recovery in China may also impede the growth in theexport-oriented sector.
  
  − Nevertheless, we still expect domestic economy to continue growing, with a projected GDP growth of 4.5% - 5.0%in 2024 (2023: 3.7%). The anticipated boost to the domestic economy due to the expected upturn in the technologycycle, particularly within the E&E sector, and China’s gradual economic recovery. Additionally, strong domesticdemand is also expected to contribute significantly to this positive outlook.

Source: Kenanga Research - 21 Feb 2024