PETALING JAYA: Malaysia’s exports and imports for 2022 are expected to increase 26% and 30.5% respectively, according to forecasts by MIDF Research.
“Based on the latest data, external demand remained robust despite concerns over slowing global growth. We expect more moderate growth rates for both exports and imports in the final few months of 2022 as low-base effect diminishes,” it said in a report today.
MIDF said the trade sector stands to benefit from elevated commodity prices, growing external demand for electronic & electrical products and commodities (petroleum and palm oil), and a continued rise in global production and international trade.
Meanwhile, imports will expand on the back of growing domestic demand, and increased business activities and consumer spending.
Nevertheless, there are several risks to the near-term trade outlook, mostly from external uncertainties such as deterioration in the global growth outlook, weaker final demand as a result of rising inflation and borrowing costs, and escalation of geopolitical tensions.
Meanwhile, UOB Research has maintained Malaysia’s export growth projection at 26% for 2022 and 1.5% for 2023 given that export growth averaged 30.3% year-to-date and risks to the trade outlook continue to tilt downside.
“Rising global recession risk and global tech downcycle are key deterrents to trade growth momentum while statistical base and commodity price effects are wildcards for the outlook going into 2023,” it said.
UOB said the largest monthly decline in September’s imports since April 2020 indicated that manufacturers begin to scale back production due to lower new export orders amid weakness in global demand conditions, affirmed by a one-year low manufacturing PMI reading (49.1 in Sept versus 50.3 in Aug).
As Malaysia’s top trading partner, a weaker growth outlook for China due to its dynamic Covid-19 policy and property woes will take a toll on regional economies’ merchandise trade performance including Malaysia. This is in addition to an anaemic growth outlook projected for the US and the EU.
However, the preferential market access for Malaysian exporters and a cross-country initiative to strengthen the semiconductor supply chain resilience are expected to provide support to Malaysia’s trade growth momentum ahead.
The initiatives include the ratified Comprehensive and Progressive Agreement for Trans-Pacific Partnership which will come into effect for Malaysia on Nov 29 this year following the Regional Comprehensive Economic Partnership Agreement that came into force for Malaysia on Mar 18 this year as well as a memorandum of cooperation signed between the US and Malaysia on May 11, 2022 to strengthen the semiconductor supply chain resilience between the two nations.
Malaysia recorded the biggest ever trade surplus in September 2022 at RM31.7 billion (Aug: RM17.0 billion) as exports continued to post double-digit growth of 30.1% y-o-y (Aug: 48.1%) while import growth more than halved to 33.0% (Aug: 67.3%).
