Malaysian Exports Hold Up Well, Central Bank To Stay Put

The key question is whether the central bank will react to the deflation data by deciding to cut rates at the ongoing meeting. We aren’t expecting a rate cut, but won't be surprised by one given that high real interest rates allow for such a pre-emptive move to support growth in the face of external risks.

Source: shutterstock

Exports beat estimates, again

January export growth of 3.1% year on year was yet another upside miss against the consensus estimate of a 0.6% fall on the month. Exports were better-than-expected in three months out of the last four, though January was still a modest slowdown from the 5.1% growth in December, which was revised up from the initial estimate of 4.8%.

Malaysia exports are defying the trend of accelerated export declines seen elsewhere in the region, and this divergence is mostly down to the outperformance of the country' electronics exports. While electronic shipments from other parts of Asia are already falling, Malaysia’s are still holding up well, even as the recent tapering of its growth squares with the broader downturn in the sector.

Malaysia exports are defying the trend of accelerated export declines seen elsewhere in the region, and this divergence is mostly down to the outperformance of the country' electronics exports

The weakness in the commodities cluster (crude petroleum, liquefied natural gas, petroleum products, and palm oil) is another drag, on Malaysia's exports and appears to be an intensifying sign of a global demand slowdown, even as oil prices have firmed up in 2019.

Imports grew by 1% YoY in January - an unchanged pace when compared to December, as strong gains in iron and steel and crude petroleum imports offset weakness in electronics products petroleum products imports. 

The trade surplus widened to MYR 11.5 billion from MYR 10.7 billion in January, heralding continued current account support to the Ringgit in 2019. We anticipate a steady current surplus equivalent to about 2% of GDP this year (2.3% in 2018 narrowed from 3.0% in the previous year).

1 2
View single page >> |

Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.