Malaysia: Exports lose momentum – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest exports data in the Malaysian economy during July.

Key Takeaways

“Gross exports increased at a slower pace by 5.0% y/y in Jul (Jun: +27.2%), undershooting our estimate (+9.5%) and Bloomberg consensus (+9.9%). July’s export growth also marked the smallest gain in eight months as favourable base effects waned amid prolonged COVID-19 containment measures. Conversely, gross imports surged more than expected by 24.0% y/y (UOB estimate: +20.0%; Bloomberg consensus: +20.1%; Jun: +32.1%). This brought the trade surplus down to the smallest amount in 14 months at MYR13.7bn last month (Jun: +MYR22.3bn).”

“All three export sectors saw slower annual improvement last month, with that of manufactured goods exports decelerating at the fastest pace… Demand from almost all major trading partners weakened in Jul, with shipments to the US and China posting the first annual decline since mid-2020.”

“We expect a temporary blip in Malaysian exports due to operating disruptions arising from the spread of COVID-19 Delta strain outbreak. Meanwhile, the country’s vaccination program has made further progress with the percentage of fully vaccinated persons in the population hitting above 60% presently. With that, the government has begun to gradually relax some COVID-19 restrictions for businesses in the states or federal territories under Phase 1 and 2 of the National Recovery Plan this month (Aug). This alongside sustained improvement in global demand will soon help to bring Malaysia’s export growth back on track.”