KUALA LUMPUR (Oct 5): MIDF Research has revised its exports growth forecast for Malaysia this year to 7.3%, as against 18.9% last year.

This comes after the government reported that exports fell 0.3% year-on-year in August, compared to a 9.4% growth in July.

In a note today, MIDF Research said its forecast took into consideration the higher base effects and signs of easing key global indicators.

"This is supported by lower exports growth for the first eight months which registered at 6.3% compared to a double-digit growth of 22.5% in the same period last year.

"The moderating pace is consistent with gradual rise in global commodity prices, expectation of slight slowdown in overall business performance on top of the heating Sino-US trade conflict," it added.

MIDF Research said Malaysia's regional partners' trade performance was also gloomy in the third quarter of the year.

"Exports growth of Vietnam went down to a single digit of 6.2% year-on-year after four straight months of double digit growth. In addition, South Korea exports contracted 8.2% y-o-y in the same month," it said, highlighting that Malaysia could expect similar waves of compression in upcoming trade numbers for September.

With regards to manufacturing conditions and activity, MIDF Research said both global and emerging economies' manufacturing purchasing managers' index (PMI) edged down but still maintained an expansionary trend at 52.2 points and 50.3 points respectively on Sept 18.

"With a weak August data plus possibilities of similar patterns of September data from our regional partners, exports growth for 3Q18 is expected to be lower than the earlier two quarters of 2018, in line with easing global manufacturing PMI," it said.

The Department of Statistics Malaysia, in releasing August export figures earlier today, said the fall during the month was partly due to fewer working days as a result of Hari Raya Aidiladha and Merdeka holidays besides weaker sectoral performances.

Manufactured and mining goods grew less at 1.8% y-o-y and 5.5% y-o-y respectively compared to July's figures while agriculture worsened at -20.8% y-o-y.

On the other hand, Malaysia's August imports recorded double-digit growth of 11.2% y-o-y to RM80.2 billion.

"As exports still outperformed imports in terms of value, we managed to record a trade surplus of RM1.6 billion — the lowest gain in 46 months," said MIDF Research.