Trade surplus hits three-year high

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KUALA LUMPUR: Malaysia’s exports in November 2014 surprised economists and the market by recording an expansion of 2.1% to RM63.73 billion from a year earlier, while imports grew a marginal 0.1% year-on-year (y-o-y) to RM52.6 billion, resulting in a higher trade surplus of RM11.1 billion — the best performance in three years.

In a statement yesterday, the Department of Statistics attributed the export growth to improved demand for manufactured goods which rose 4.6% to RM49.58 billion compared with November 2013, led by exports of electrical and electronics products by RM1.52 billion, chemicals and chemical products (RM404.6 million), and iron and steel products (RM347.2 million).

“Exports of crude petroleum also increased 12.5% due to higher volume,” it added.

The Department of Statistics said exports of agricultural goods, however, dropped 13.4% to RM5.17 billion due to the decline in exports of palm oil and natural rubber.

“The exports of mining goods also declined 0.4% to RM8.66 billion, due mainly to lower exports of liquefied natural gas by RM412.1 million,” it added.

The latest export figures beat a median forecast polled by Reuters, but import figures fell short.

Reuters had reported that Malaysia’s exports in November likely fell 0.4% from a year earlier as falling crude prices and an oversupply of commodities affected exports. Imports were expected to rise 8.2%, as government-linked projects resume in the second half of 2014.

“What caught most by surprise is (the surge in) crude petroleum exports. Although crude oil price has fallen, volume [still] went up in November, resulting in larger exports,” CIMB economist Jarratt Ma told The Edge Financial Daily yesterday.

“Moving forward, we have to monitor closely the interplay between crude petroleum’s volume and value in the next few months. Crude petroleum outlook is hazy because there is a need to balance out [the effect] from these two factors,” said Ma.

In terms of monthly comparison, Malaysia’s exports, however, declined 2% to RM63.7 billion from October 2014, led by lower exports of animal and vegetable oils and fats, mineral fuels and chemicals.

Imports also fell 17.7% to RM52.6 billion from October 2014, mainly attributed to lower imports of mineral fuels, inedible crude materials, and machinery and transport equipment.

In a note to clients yesterday, JF Apex Securities said the reading of exports and imports translates into a trade surplus that surged to a three-year high of RM11.1 billion, increased by 12.3% y-o-y and expanded 825% month-on-month.

“We maintained our export forecast for December 2014 with a moderate growth pace of 2.5% y-o-y, reflecting the continuous drop in crude oil prices that might affect our exports, coupled with China’s weak manufacturing data in December 2014 that signalled fragility in our main trading partner’s economy.

“Meanwhile, we adjusted our import forecast from 5.9% y-o-y to 2% for December 2014 due to softer imports for this month,” it added.


This article first appeared in The Edge Financial Daily, on January 8, 2015.