This article first appeared in The Edge Financial Daily, on April 7, 2016.

KUALA LUMPUR: Malaysia’s exports rebounded in February this year to expand by 6.7% year-on-year (y-o-y), the highest y-o-y growth rate since October 2015, driven by the increase in the exports of electrical and electronic (E&E), palm oil and palm-based, and timber and timber-based products.

Exports grew to RM56.7 billion in February from RM53.2 billion a year ago.

It contracted 2.8% y-o-y in January 2016.

Nomura Global Markets Research said export growth in February was significantly above its and consensus expectations of 2.4% and 2.9% respectively.

AllianceDBS Research economist Manokaran Mottain said the y-o-y export growth was partly attributed to low-base effect from the first quarter of 2015 (1Q15), as well as exchange rate translation gains from a weak ringgit.

Seasonally adjusted exports also rose by 0.5% month-on-month (m-o-m) to RM62.4 billion, after contracting 7.4% m-o-m in January.

In a statement yesterday, the Statistics Department said the improvement was led by E&E products, which accounted for 35.4% of total exports and grew by 8.9% to RM20.1 billion, followed by palm oil and palm-based products which rose 7.8% to RM4.3 billion and accounted for 7.5% of total exports.

Exports of palm oil also rose 4.4% y-o-y, while timber and timber-based products, which accounted for 2.8% of total exports, increased 17.4% y-o-y to RM1.6 billion.

In geographical terms, the Statistics Department said Malaysia registered higher exports to countries like the United States, China, South Korea, Indonesia and the European Union nations.

Meanwhile, import performance in February 2016 was an “upward surprise”, rising 1.6% to RM49.4 billion from RM48.6 billion a year ago, due to higher imports of consumption goods and capital goods. It grew 3.3% y-o-y in January.

Nomura’s and market estimates was for a decline of 5.5% and 1.5% respectively.

In seasonally adjusted terms, imports rose by 1.1% m-o-m to RM57.7 billion.

As a result, the trade surplus widened to RM7.4 billion in February 2016, up 61.4% from RM4.6 billion a year ago and a 36.3% increase from RM5.4 billion in January. This brings the cumulative surplus to RM12.7 billion in the January-February 2016 period.

Looking ahead, Manokaran expects the country’s gross domestic product (GDP) growth to be slower at around 4.3% in 1Q16.

“While we anticipate a turnaround in external and domestic macro prospects in the second half of this year following the various economic stimuli in place, we maintain our full-year 2016 GDP growth forecast at 4.5% (2015: 5%),” he said.

In a note, JF Apex Securities envisages that exports and imports will continue to post a positive growth of 2.3% and 1.5% respectively in March 2016, following encouraging Purchasing Managers Index data posted by China for a third month of this year that showed better health for the world’s second-largest economy.

“In addition, our trade performance will continue to be supported by resilient growth in E&E products and sustainable growth in our manufacturing sector in addition to mild recovery in the semiconductor industry,” it added.