MALAYSIA’S export growth is likely to slow in June as external headwinds continue to swirl round the economy.
Economists polled by the Business Times expect exports to post an average 3.45 per cent growth while imports are expected to grow by an average 8.5 per cent, leading the trade balance to fall further to average RM5.63 billion.
The Ministry of International Trade and Industry will release the data today.
Bank of America Merrill Lynch said exports are being weighed down by a slowing global growth and softer commodity prices.
Imports are likely to expand in double-digits, supported by healthy consumer demand and government spending.
DBS Bank economist Irvin Seah said the trade figures on tap today and the Industrial Production Index tomorrow will reflect the external headwinds facing the economy.
He said Malaysia’s export and IP numbers bucked the trend of declines in regional markets in May which he said was largely a distortion from the base effect.
“We’ve continued to reiterate the point that the numbers have been sliding on the sequential basis. And June’s set of figures will further reinforce the point, be it from the headline figure perspective or from the margin. It’s turning from bad to worse on the external front.”
The Purchasing managers Index of key export markets have been heading south persistently, while indicators on the global electronics cycle are pointing to further easing in demand.
“As far as Malaysia is concerned, the outlook on the external front is more likely to deteriorate further with the eurozone stuck in its economic turmoil and the recovery momentum in US turning more sluggish,” Seah said.
Asia’s demand, with China’s recent growth being sub-par, is slowing, which Seah said implies weaker exports and industrial performance in the months to come.
But CITI noted that although year-on-year growth for exports has slowed, intra-month gains edged up.
The growth of Japan’s imports from Malaysia, it added, remained broadly stable at 22.6 per cent year-on-year while the decline in China’s imports from Malaysia eased to -8.7 per cent year-on-year.
Singapore’s exports to Malaysia slowed to 0.7 per cent year-on-year from May’s 5.6 per cent.
OCBC Bank said export growth remains weighed by lacklustre demand for manufacturing goods, especially in electrical and electronics, as well as the impact from the moderation seen in commodity prices.
As it is, volume of key commodity exports including palm oil, has fallen almost to the level seen before the commodity boom in 2009.