Malaysia's economy to stagnate this year: BIMB Securities

PETALING JAYA: Malaysia's economy will stagnate this year as a rebound in Chinese demand is unlikely to materialise, which will continue to dampen Malaysia's export performance, BIMB Securities said.
In a report yesterday, BIMB Securities economist Imran Nurginias Ibrahim said sub-par growth in developed markets had affected the country's export performance in 2015.
"The global economic malaise has hit Malaysia's trade, especially with the slowdown in demand for commodities in China, Malaysia's biggest single trade partner," he said.
He noted that Malaysia's trade surplus had dipped to RM8 billion in December 2015 from the high of RM12.2 billion in October 2015 partly due to a slowdown in China's economy.
Malaysia also suffered a drop in exports due to the fall in commodity prices, with global crude oil prices taking a beating and palm oil being hit by a 10% decrease but the weaker ringgit gave some support.
However, Imran is optimistic that commodity prices will recover in the next few months and boost exports.
"Looking ahead, this year's export growth will again hinge on how the developed markets perform. We expect the eurozone and Japan to do better this year while we continue to see China slowing down," he said.

Imran said exports of manufactured goods, which have been the linchpin of exports the past two years on weak commodity prices, could see a slowdown this year on more cautious demand for consumer electronics.
He said a further indication of the challenges that the local exports-reliant electrical and electronics firms faced came from the Semiconductor Industry Association's (SIA) release on global chip revenue, which showed a marginal drop last year to US$335.2 billion compared with the previous year where 2014 was the best year yet for the industry.
For December 2015, sales of chips were down 5.2% to US$27.6 billion year-on-year and 4.4% month-on-month.
The SIA had said in a statement said that factors that limited more robust sales last year were softening demand, the strength of the dollar, and normal market trends and cyclicality.
However, the SIA said that "in spite of these challenges, modest market growth is projected for 2016".
Imran said Malaysia's trade performance is expected to be weaker as recovery on the external front remains fragile, adding to concerns the much-needed export boost to cushion faltering domestic demand may not pen out as much as expected.
"The still fragile growth outlook in advanced economies, coupled with downside growth risks from emerging markets, imply further uptick in global demand, and hence exports, could be very modest.
"We however remain hopeful of positive exports growth in the next few months taking cue from a lower base for oil prices and not forgetting positive lift from ringgit weakness. Continuous exports recovery, though modest, could still help cushion moderation in domestic demand and underpin overall economic growth going forward," he added.