KUALA LUMPUR (Jan 30): Malaysia’s external trade for 2021 is expected to remain modest with exports projected to rebound by 2.7%, the Ministry of International Trade and Industry (MITI) said.
Senior minister Datuk Seri Mohamed Azmin Ali said the outlook for 2021 is expected to be better as the World Bank and International Monetary Fund (IMF) forecast that global growth will rebound by 4.0% and 5.5%, respectively.
“For world merchandise trade volume, the World Trade Organisation (WTO) projected a 7.2% growth in 2021.
“In tandem with improvement in global growth and international trade, Malaysia’s gross domestic product (GDP) is expected to rebound by 6.5% to 7.5%, higher than the forecast growth for ASEAN-5, which is 5.2%,” he said in a statement today.
Mohamed Azmin noted that Malaysia’s exports had been showing signs of recovery since September 2020 with positive year-on-year growth.
Higher demand for semiconductors and commodity-based products is anticipated to drive exports as global economic activities recover. The trade surplus recorded in 2020 marked the fourth consecutive year of double-digit growth, with an expansion of 26.9% to RM184.79 billion compared to 2019.
It was also the largest trade surplus thus far, representing Malaysia’s achievement in sustaining trade surplus for 23 consecutive years since 1998.
Total trade in 2020 amounting to RM1.777 trillion, contracting by 3.6% compared to 2019 while imports totalled RM796.19 billion, a decline of 6.3%.
Malaysia’s exports in 2020, valued at RM980.99 billion, declined marginally by 1.4% compared to the preceding year, in tandem with the unfavourable external environment due to the impact of the Covid-19 pandemic.
Exports rebounded in the second half of 2020, increasing by 4.8%, a significant improvement from a 7.9% contraction in the first half of 2020 as the economy progressively reopened and external demand gradually recovered.
Lower exports were recorded to Thailand, India, Bangladesh, Vietnam, and Japan while higher exports was registered to China, the US, Singapore, and Hong Kong.
“Malaysia’s trade performance was in tandem with countries in the region, notably Indonesia, Singapore, South Korea and Thailand.
“While trade with existing Free-Trade Agreement (FTA) partners in 2020 stood at RM1.185 trillion, registering a decrease of 3.7% and accounting for 66.7% of Malaysia’s total trade,” he said.
Mohamed Azmin said the recent signing of the Regional Comprehensive Economic Partnership (RCEP), the biggest FTA in the world, will provide Malaysian companies and businesses access to more than a third of the world’s market, attract foreign direct investment, and be a boon to Malaysia’s export growth.
“Going forward, investor confidence has been bolstered by Moody’s latest affirmation of Malaysia’s local and foreign currency long-term issuer ratings at A3, with a stable outlook.
“This is a testament to the government’s strong fiscal discipline and robust medium-term growth prospects and demonstrates Moody’s confidence in Malaysia as having strong credit standing,” he said.
While these are challenging times, the government’s priority is to place the nation firmly on the path of economic recovery particularly with the 12th Malaysian Plan as the blueprint for sustainable growth founded on sound economic fundamentals and decisive policy measures.