RAM sees August export growth moderating

PETALING JAYA: RAM Ratings expects Malaysia’s export growth to moderate to 20% in August after registering 30.9% growth in July.

This is amid the dissipation of the low-base effects and seasonal boost for domestic industrial output, which had driven the preceding month’s 30.9% expansion.

The rating agency said in a statement, that exports growth in August is anticipated to keep being driven by demand from China and Singapore.

The Department of Statistics is expected to release the August external trade figures today.

RAM Ratings said import growth is also envisaged to moderate to 15.4% given its strong correlation as a key input factor for exported goods amid Malaysia’s close linkage with the global value chain.

“Moreover, domestic restocking cycles are envisaged to decelerate after the surge at the start of this year. As such, import demand may be dampened as the need to build up inventories reduces with respect to the moderating pace of demand for exports.

In view of that, it estimates trade surplus to come in higher at RM13.1 billion in August versus RM8.03 billion in July.

Nonetheless, RAM Ratings stressed that the growth of imports and exports is envisaged to keep expanding at a healthy pace, which will be facilitated by the resilient pace of industrial activity and upbeat global demand, although the momentum will likely moderate towards the end of this year, as the higher-base effects from H2 2016 kick in.

Furthermore, the slower pace of new electronic orders by key export markets such as Japan and the US also suggests a further moderation in export growth in the coming months.