MIDF Research has maintained its projection for exports and imports to grow at 16.9% and 19.2%, respectively, following the release of Malaysia’s May 2022 trade figures.
It said Malaysia’s total trade expanded by 33.6% year – on – year (y – o – y) to RM228.4 billion in May, driven by an acceleration in both exports and imports while cumulatively, total trade rose to RM1.09 trillion in the first five months this year, touching the RM1 trillion mark faster than last year on the back of robust external demand and high commodity prices.
Exports grew faster at 30.5% y – o – y in May 2022 against 20.8% in the preceding month. Performance was higher than the research house’s estimates supported by increased shipments to regional countries and stronger re-exports, it said in a note today.
“Robust expansion in shipments of electrical and electronic (E&E) and commodities, particularly palm oil and petroleum products, also contributed to stronger exports growth.
“Meanwhile, imports growth grew even faster at 37.3% y – o – y in May 2022 versus the previous month’s 22.1 per cent on the back of continued improvement in domestic economic activities and high commodity prices,” MIDF said.
However, the research firm noted that the trade surplus for May 2022 shrank to the lowest since May 2020, declining to RM12.6 billion versus RM23.5 billion in April 2022, due to lower exports and higher imports.
By destination, MIDF Research said increased exports to the Association of Southeast Asian Nations (Asean), which rose 44.2% y – o – y, were the major contributor to the stronger exports in May 2022 on strong demand for E&E and petroleum products.
In contrast, exports to other major destinations such as China, the United States (US) and European Union (EU) continued to grow robustly at a double – digit pace, albeit relatively slower than April 2022, it said.
On a sectoral basis, manufacturing and agriculture exports rose in May, while the rise in mining exports was more moderate than the previous month.
Sustained growth in manufacturing exports (May 2022: 27.3%) was supported by stronger shipments of E&E and machinery, equipment and parts, and a rebound in exports of petroleum products, the research house said.
“Agricultural goods exports also expanded stronger by 43.9% y – o – y, reflective of the robust palm oil exports. Mining exports, on the other hand, recorded strong but moderate growth of 54.9% y – o – y from 64.4% y – o – y in April, backed by sustained growth in external demand for liquefied natural gas and crude petroleum,” MIDF Research said.
However, the research house emphasised that although May saw robust trade, this was due to a lower base in 2020.
On the external front, the effects of war in Ukraine, high commodity prices and rising inflation on global demand remained a concern and the slowdown in China was another downside risk, given the renewed surge in COVID – 19 infections and the negative effect of strict lockdowns.
“Overall, we expected continued demand for E&E products and commodities such as palm oil and petroleum to support exports in the coming months.
“Imports growth will be sustained as consumers continue to increase spending on the back of the economic reopening. Business spending will also increase in anticipation of improving demand, and the positive impacts from further COVID – 19 relaxation,” it added.