Malaysia's exports growth to moderate in Q4 on unfavorable base effect

PETALING JAYA: Malaysia's exports, whose growth slowed to 14.8% in September, are expected to to moderate in the final quarter due to unfavorable base effect, according to MIDF Research.
September exports expanded 14.8% to RM78.3 billion in September 2017 from RM68.2 billion a year ago, came in below market expectations of 20%. Nevertheless, it is the tenth consecutive months of double-digit expansion since December 2016.
MIDF Research maintained its 2017 exports growth forecast at 14.5%.
According to the Department of Statistics Malaysia, re-exports in September 2017 were valued at RM13.6 billion and accounted for 17.3% of total exports, while domestic exports grew 11.6% to RM64.7 billion.
The main contributors to higher exports were electrical and electronic products, liquefied natural gas (LNG), refined petroleum products, natural rubber as well as timber and timber-based products, all of which reported increases.
Nevertheless, palm oil and palm oil-based products fell 1.6% to RM6.3 billion, mainly due to the decrease in palm oil-based oleochemical. Crude petroleum, which contributed 2.2% to total exports, also declined 4.9% to RM1.7 billion due to the decrease in export volume.
Similarly, imports growth is moderating and registered at 15.2% or RM69.7 billion in September, attributable to higher imports of intermediate, capital and consumption goods which grew 13.7%, 10.4% and 5.6% respectively.
Malaysia's total trade in September 2017 rose 15% to RM147.9 billion, with trade surplus increasing 11.5% to RM8.6 billion from a year ago.
Nonetheless, with exports and imports growing 22% and 19.8% respectively in the third quarter, coupled with the highest trade surplus of RM26.5 billion in 2017, MIDF Research opined that Malaysia's gross domestic product (GDP) growth to reach above 5% on the back of
robust external trade performance during the quarter.
It cautioned though that protectionist threat, geopolitical tension and policy uncertainties in developed countries remains headwinds for global trade in the near term.
For the first nine months of the year, Malaysia's total trade stood at RM1.3 trillion, with China being the biggest trade partner making up 16.2% of the total trade, followed by Singapore at 12.9%.
Total exports for the nine months stood at RM690.3 billion while total imports at RM620.7 billion. Total exports to Asean countries stood at RM202.4 billion while total imports from Asean countries came in at RM158.7 billion.