MIDF Research: E&E exports to pivot Malaysia’s external trade in 2024
20 Feb 2024
MIDF Research expects Malaysia’s external trade to likely recover in 2024, backed by a turnaround in electrical and electronics (E&E) trade.
In a research note today, it said the country’s export performance is set to rebound and grow at +5.2 per cent this year compared to 2023’s -8.0 per cent.
“Although the E&E exports remained below a year ago, the expected turnaround in the E&E trade will be one of the factors to support external trade recovery,” said MIDF Research.
Increased demand for petroleum products and palm oil could also support export growth this year.
Malaysia stands to benefit from the pick-up in regional production activities and improvement in global demand as the stronger-than-expected rebound in January 2024 was also in line with improving regional trade performance.
The nation’s total trade rebounded to +13.3 per cent year-on-year (y-o-y) in January 2024, marking the first growth in 11 months.
The better performance was due to increases in both exports (+3.4 per cent) and imports (+5.3 per cent) and the lower base effect.
Meanwhile, trade surplus amounted to RM10.1 billion and marked the 45th consecutive month of trade surplus since May 2020 due to the relatively stronger rise in imports.
“We still expect a pick-up in E&E trade, which will support the overall trade recovery and will continue to anchor for the continued trade surplus.
“We reiterate the reduced trade surplus mainly reflected dependency on imports for products such as transport equipment, machinery, chemicals, agriculture products and even crude petroleum,” it said.
Nevertheless, several downside risks could disrupt the trade outlook, including worsening geopolitical and trade tensions, lower demand from major trading partners, and prolonged weakness in global production activities.
MIDF Research also foresees Malaysia’s imports to rebound to +4.4 per cent this year from -6.4 per cent in 2023 on the back of expanding domestic demand and improvement in manufacturing activities.
“We believe the continued rise in imports of intermediate goods and capital goods is consistent with the better purchasing managers’ index (PMI) reading in January 2024, which pointed to stabilisation in the manufacturing sector activities and optimism that demand outlook will improve.
“Going forward, imports will continue to be driven by increased investment and business activities, including inventory restocking and sourcing of raw materials. In addition, imports of consumption goods will also expand on the back of growing domestic spending,” it said.
Source: Bernama
