KUALA LUMPUR: Kenanga Investment Bank Bhd has retained the 2024 export growth forecast at 9.4 per cent on an expected turnaround in the export of electric and electronic (E&E) and a demand recovery from China, particularly in the second half (2H) of 2024.
“We anticipate export growth to gradually improve in the coming months, expecting a double-digit expansion by year-end, driven by a tech sector upturn and China’s steady economic rebound underpinned by the ongoing government stimulus.
“However, we maintain a cautious outlook due to potential disruptions from rising geopolitical tensions that could disrupt the global supply chain and trade activities,” Kenanga said in a report.
The investment bank said a slower-than-expected recovery in China may also cap the growth potential, particularly in the export-oriented sector.
Exports fell slightly in February, lower by 0.8 per cent year-on-year (YoY) below Kenanga’s expectations of 3.0 per cent and consensus at 2.4 per cent.
Month-on-month (MoM) exports fell sharply by 9.1 per cent, partly due to seasonal factors, such as the factory shutdown during the Chinese New Year holidays.
There were also lower shipments to major trading partners and weak demand for manufactured products.
Exports to major destinations demonstrated a mixed performance. Although growth remained supported by positive exports to the United States (US) by 10.1 per cent and Japan by 5.6 per cent, it was dragged down by sustained weakness in shipments to China, down by 0.4 per cent, and Singapore, also lower by 15.3 per cent.
By sector, weak exports were dragged by manufacturing, down by 2.4 per cent in February, and agriculture, down by 4.8 per cent, but this was partially supported by a sharp rebound in the mining sector of 16.8 per cent.
By product, weak exports mainly came from E&E products, which were down by 9.8 per cent and have remained in contraction since August 2023, as well as subdued exports of petroleum products by 14.0 per cent.
Kenanga also noted that Malaysia’s trade surplus expanded slightly to RM10.9 billion in February from RM10.2 billion in January this year, beating the house estimate of RM10.3 billion but lower than the consensus of RM12.3 billion as imports outperform exports on an MoM basis.
Meanwhile, total trade moderated sharply by 3.3 per cent in February from 13.3 per cent in January but remained positive for the second straight month.
“We expect a recovery in the manufacturing export-oriented sector, alongside domestic demand growth driven by a lower unemployment rate and improving household income.
“That said, our gross domestic product (GDP) growth forecast for 2024 remains at 4.5-5.0 per cent in 2024,” Kenanga said.
