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MIDF Research Expect Exports to Grow Based on Rising Trend

KUALA LUMPUR: MIDF Research has maintained its projection that Malaysia’s good exports and imports will recover this year, growing at 5.2% (-8% in 2023) and 4.4% (-6.4% in 2023).

The firm expects global electrical and electronics (E&E) trade turnaround and the broad improvement in external demand from major markets to support export recovery this year.

“The pick-up in investment activities and businesses stocking up on materials in anticipation of growing demand will also help imports to recover this year.

“Nevertheless, we remain cautious that the ongoing geopolitical conflicts and trade could negatively derail the trade outlook,” it said in a research note.

At the same time, MIDF Research is closely monitoring demand, which is constrained by high interest rates kept for an extended period and possible weaker Chinese growth prospects.

The Investment, Trade and Industry Ministry (MITI) said that Malaysia’s trade continued its upward trajectory in April 2024, recording a 12.1% growth to RM221.74 billion compared to the previous year.

MITI said that exports rebounded in April 2024 by 9.1% year-on-year (YoY) to RM114.72 billion after 2 consecutive months of contraction in line with global trade recovery.

“Growth was contributed mainly by higher exports of machinery, equipment and parts, chemicals and chemical products, crude petroleum, palm oil and palm oil-based agriculture products and iron and steel products,” it said.

MIDF Research views April’s stronger external trade as in line with regional trends and expects further pick-up in external demand to support the economy this year.

“We opine that a recovery in exports to major markets signals a broad-based and general pick-up in international trade activity in April.

“We are expecting exports to grow to major markets like the US, China and ASEAN to support the overall external trade recovery this year,” it added.

The commodity sector will ride on the growing demand for resource-based materials with sustained global growth.

The research firm oversees E&E exports to gradually improve in the coming months in line with better global semiconductor sales and global E&E market turnaround.

“Manufacturing exports will also benefit from global production recovery as firms restock and rebuild inventories,” it continued.

OCBC Senior ASEAN Economist Lavanya Venkateswaran said there is likely to be some normalisation in export growth in YoY terms as favourable base effects fade.

“Notwithstanding that, we expect a trend improvement in export growth supported by E&E exports in the second half of 2024 (2H24) as global electronics demand improves in line with our house view.

“The trade and current account surpluses should remain supported. We maintain our 2024 current account surplus forecast of 2.5% of gross domestic product (GDP),” she said.

“Resilient growth prospects and solid external balances amid benign inflationary pressures will allow Bank Negara Malaysia (BNM) to keep its policy rate unchanged in 2024.

“The key risk to our forecasts is from the timing and mechanism in the introduction of targeted fuel subsidies,” she added.


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