Friday 29 Mar 2024
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KUALA LUMPUR (Oct 4): Malaysia's imports in August shrank to the lowest level seen since the global financial crisis while exports fell for the first time this year, said MIDF Research in a note.

Imports fell 12.5% on an annual basis, the worst since September 2009, while exports dipped 0.8% per annum, compared with the 1.7% annual growth registered the previous month, resulting in trade surplus of RM10.9 billion.

Manufacturing, which accounted for about 84% of total exports, inched up 0.1% per annum.

Meanwhile, agriculture (7.4% share) rose 12% per annum, rebounding from a decline of 9.3% in the preceding month, and mining exports fell 20.7% per annum.

Exports of electrical and electronic (E&E) products, which account for 40% of all exports, fell 7.4%, the biggest fall since February 2013, on the slowing global economy and trade tensions that have dampened demand.

Likewise, major products such as crude petroleum and liquefied natural gas (LNG) have also declined, while palm oil and its products rebounded to 23.3% per annum from 11.8% in the previous month, as shipments to India and China tripled and doubled respectively.

"We could expect a continuous positive momentum in upcoming months for palm oil sales particularly to India (Malaysia's biggest palm oil buyer) in preparation to Diwali festival," said the research house.

Capital goods, which constitute about 11% of total imports, fell sharply by 31% per annum, the biggest fall since April 2003.

"This was mainly due to high base effect last year as Equanimity, the luxury super yacht owned by Jho Low involving funds from 1MDB, was brought back to Malaysia during the month before [it was] sold to Genting in April 2019," it said.

Meanwhile, intermediate goods — which constituted the bulk of total imports — contracted by 13.9%, a 16-month low, also due partially to the high base effect.

"Despite the high base factor, intermediate and capital spending are indeed weak as the performance had been deteriorating for some months, signalling that manufacturers are not optimistic on the future demand for its products. This could weigh on employment opportunities and future exports," the research house said.

MIDF Research believed that domestic exports' slip was just a temporary glitch and will rise again on the back of LNG exports.

Despite the improvement, the outlook for re-export activities is rather gloomy for the remainder of the year in the event of multiple headwinds besides higher base effects.

"Looking ahead to the 3Q19, exports performance is expected to be quite vulnerable especially with the unresolved trade tensions," it said, while maintaining its exports growth forecast at 1.7%.

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