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KUALA LUMPUR: The country’s exports jumped a faster-than-expected pace of 36.4% year-on-year (y-o-y) to hit an 18-month high of RM59.44 billion in March 2010, while imports expanded by 45.3% to RM45.09 billion.

Overall, total trade soared 40.1% y-o-y to RM104.54 billion, riding on the upward momentum in exports and imports, the Ministry of International Trade and Industry (Miti) said yesterday. This has reinforced expectations for strong economic growth in the first quarter.

Exports in March were the highest since September 2008. A Reuters poll of 14 economists had forecast March exports to expand by 20.6% from a year earlier.

According to the preliminary external trade statistics, Miti said a higher trade surplus of RM14.35 billion was recorded in March, up 14.8% from the same month last year. This was the 149th consecutive month of trade surpluses since November 1997.

Affin Investment Bank economist Alan Tan said the sharp pick-up in imports of intermediate goods indicated that the sharp rise in exports would be sustained in the first half of the year.

“We expect industrial production numbers to show a sharp rebound in March, translating into a strong GDP growth of about 7% in the first quarter,” he told Reuters.

HSBC senior Asian economist Robert Prior-Wandesforde said: “It looks to us as though exports in 1Q as a whole were up strongly probably by 6.5% on a seasonally adjusted basis, which in turn bodes well for GDP. GDP will be something close to 11% in 1Q and for the year as a whole it would be 7.3%.

“The picture is one of rampant trade growth. A lot of it was intra-Asia exports but exports to the US have picked up very strongly too. This is a V-shaped recovery, which in our view is sustainable and will lead to significant further upside in terms of GDP growth.”

Standard Chartered economist Alvin Liew said the latest trade data should be positive for the ringgit.

“More  importantly, the strong 1Q export performance should bode well for Malaysia’s 1Q GDP, and the expansion is likely to outperform market expectations due to a continued improvement in external demand and resilient private consumption.  

“Given expectations of a robust recovery in 1H2010, we reiterate our view that the central bank is likely to normalise interest rates further to suit current economic conditions. We expect BNM to hike rates by 25bps at both its May 13 and July 8 policy meetings, and to leave the OPR on hold at 2.75% for the rest of the year,” he said.

During the January-March period this year, the country’s total trade increased by 32.6% to RM278.51 billion, supported by strong growth in exports to China, Singapore, Japan, Hong Kong, the United States, Thailand, India, Korea, Netherlands and Australia.

Exports grew by 30.8% to RM158.73 billion while imports rose 35.1% to RM119.78 billion, resulting in a trade surplus of RM38.95 billion.

Product sectors which contributed to the significant increase in exports in March were electrical and electronic (E&E) products valued at RM5.38 billion (31.8% of total exports), chemicals and chemical products at RM1.48 billion (60.8%), palm oil at RM1.46 billion (49.3%), transport equipment at RM1.4 billion (188.4%) and crude petroleum at RM1.08 billion (55.8%).

China, Singapore, Japan, US and Thailand were the top five export destinations, accounting for 53.2% of Malaysia’s total exports in March. Asean accounted for RM15.89 billion or 26.7% of Malaysia’s total exports, up by 45.3% from a year earlier.

Major import products which contributed to the significant increase in imports in March were E&E products valued at RM16.17 billion (35.9% of total imports), chemicals and chemical products at RM4.28 billion (9.5%), machinery, appliances and parts at RM3.75 billion (8.3%) and refined petroleum products at RM2.57 billion (5.7%).

The top import sources were Singapore, Japan, China and US, providing a 48.8% share of the total.


This article appeared in The Edge Financial Daily, May 5, 2010.

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