Malaysian exports to improve steady in 2017: AmBank Research

PETALING JAYA: AmBank Research said it expects Malaysia’s exports to grow at a steady pace in 2017, despite uncertainties on the external front.
In a report yesterday, the research house said, however, it believes there will be improvement on the back of firmer global demand with world growth projected at 3.3% this year, up from 3.1% last year.
AmBank Research said healthy commodity prices, positive contribution from semiconductors and related activities as well as the cheap ringgit would support other export-related industries such as timber and furniture.
However, it said the persistent ringgit weakness and rising production cost might slam the brakes on the nascent recovery of the manufacturing sector.
“We reiterate our 2017 gross domestic product (GDP) growth target of 4.5% from our estimated 4.2% in 2016. Our ringgit against the US dollar projection for the full year of 2017 average would be around 4.48,” it noted.
AmBank Research said exports remained in the positive growth trajectory in January for the third consecutive month and maintained their double-digit gain of 13.6% year-on-year (y-o-y), while imports picked up pace from a surge in capital and intermediate goods, going up 16.1% y-o-y in the same month.
Owing to stronger imports against exports, AmBank Research said, the overall trade surplus narrowed in January by RM4 billion to RM4.7 billion, while in the US dollar terms it was at US$1.1 billion in January from US$2 billion in December.
“We view positively on the stronger imports growth as both capital and intermediate goods grew much stronger compared to consumption which translates into positive economic growth.
“Looking at the agriculture exports, with the exception of cocoa beans, we found export volume for all the agricultural products recorded negative growth,” it said.
In terms of export value, AmBank Research said all agricultural products, except pepper and palm kernel cake, enjoyed double-digit growth, suggesting firmer commodity prices are somewhat supporting overall export value.
“Meanwhile, we noticed the export volume and revenue for tin while oil-related exports like crude petroleum, petroleum products, and LNG (liquefied natural gas) remained in positive growth,” it noted, adding that electrical & electronics products also stayed positive.