KUALA LUMPUR, Feb 20 — MIDF Research is keeping its projection for both exports and imports to expand at 9.2 per cent and 9.5 per cent year-on-year (y-o-y) respectively despite the slower-than-expected trade recorded in January.
It said the moderation in growth reflects the effect of high base last year, but the positive growth indicates continued rise in external demand for electrical and electronics (E&E) and commodities, particularly petroleum and palm oil.
“As price effect has been affecting palm oil exports, we foresee the relatively lower oil prices will also affect mining goods exports at least until the first half 2023 (1H).
“Meanwhile, we believe Malaysia, like other trading nations, will benefit from the recovery in external demand from China, which is expected to increase as China reopens its economy after strict lockdowns last year,’’ it said in a note today.
It believes trade with free trade agreement countries will also grow, boosted by the ratification of Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Nevertheless, MIDF Research continued to be cautious about trade outlook that may to be weaker-than-expected, constrained by possible downside risks such as protracted fall in global demand, elevated inflation, and escalation of geo-political tension and trade war.
In January, total trade expanded by 1.9 per cent y-o-y to RM207.51 billion, the slowest growth recorded since November 2020.
Export grew 1.6 per cent to RM112.84 billion, below MIDF Research and market expectations.
Given the moderation in exports, trade surplus shrank to a three-month low of RM18.2 billion.
“Thanks to stronger re-exports of 33.5 per cent y-o-y, which offset the fall in domestic exports, overall export growth remained positive,” it said.
Meanwhile, import growth stood at 2.3 per cent to RM94.67 billion.
“Although the overall import growth remained on expansionary trend, we noticed imports for all major types of end-uses contracted from January 2023.
“Despite strength in domestic spending, imports of consumption goods declined by 4.7 per cent y-o-y, the first contraction in more than two years,” MIDF Research added. — Bernama