This article first appeared in The Edge Financial Daily on September 7, 2017

KUALA LUMPUR: Malaysia’s exports surged 30.9% year-on-year (y-o-y) to RM78.62 billion in July from a year earlier, after slowing to 9.9% y-o-y in June, as continuous uptick in global demand allowed the country to sell more electrical and electronic (E&E) goods and palm oil products.

In a statement yesterday, the Department of Statistics Malaysia said exports of E&E products rose 28.3% y-o-y to RM27.9 billion in July. They accounted for the largest share of total exports at 35.5%.

Crude oil and liquefied natural gas exports climbed 85.4% and 50.8% respectively, while palm oil products rose 12%.

This was the third straight month that exports outpaced imports, bringing trade balance surplus to RM8.03 billion in July — marking the 237th consecutive month of trade surplus since November 1997.

Imports in July rose 21.8% y-o-y to RM70.59 billion, contributed by intermediate goods and consumption goods.

In a note to clients yesterday, MIDF Research said continuous uptick in global demand, in particular manufactured goods and optimistic market environment, is a major factor contributing towards upbeat momentum in Malaysia’s external trade performance.

It said about 45% of exports growth was contributed by economies in Asia including Australia, with exports to China and Japan sustaining double-digit growth by 28.8% y-o-y and 27.5% y-o-y respectively in July.

“We opine that continuous improvement in domestic economic activity in major economies such as China, Japan, the European Union (EU) and the US indirectly translates into stronger external demand for Malaysia’s products,” said MIDF Research.

With global trade activities picking up, the research firm sees Malaysia’s external trade outlook for August to continue on an upward trend.

However, MIDF Research maintains its export growth forecast at 14.5%, expecting exports to generally moderate in the second half of 2017 due to a high base effect.

RHB Economic Research estimates that given stronger external performance in external activities so far, exports and imports are expected to pick up to 15.2% and 18.6% in 2017, from 1.1% and 1.9% in 2016, respectively.

It added that the external outlook is supported by improving global growth prospects in 2018, strong global E&E demand as seen in the recovery of global semiconductor sales, as well as increased demand for commodity products.

In a separate statement, the Malaysia External Trade Development Corp (Matrade) said Malaysia’s total trade surpassed the RM1 trillion mark in January-July 2017, expanding 22.7% to RM1.01 trillion y-o-y.

“This was the fastest period trade breached the RM1 trillion mark, two months earlier than the normal trend. Expansion was supported mainly by trade with Asean, China, the US, the EU, Japan, India and Taiwan,” said Matrade.