Bank Negara Malaysia announced stronger export growth in October by 25.5% (September 24.7%) reflecting continued strength in demand across Malaysia’s export products and markets.
It said that moving forward, export performance will continue to benefit from the upcycle in global technology. “In addition, strong demand for non-E&E manufactured products and higher commodity prices will provide further impetus to export growth,” BNM said.
BNM said that nonetheless, the trade outlook remains contingent on the path of the pandemic, as well as the ongoing development of global supply chain disruptions.
On headline inflation, it increased to 2.9% in October (September 2.2%) mainly due to the lapse in the 3-month electricity bill discount under Pakej Perlindungan Rakyat dan Pemulihan Ekonomi (PEMULIH). The lapse in the electricity discount contributed 0.6 ppt to headline inflation.
Underlying inflation, as measured by core inflation, was also marginally higher at 0.7% (September: 0.6%) due to the gradual reopening of the economy.
On financing, BNM said that growth in net financing increased slightly to 4.0% (September: 3.9%). This reflected higher growth in outstanding loans (October: 3.3%; September: 2.9%), amid moderation in outstanding corporate bond growth (October: 5.9%; September: 6.5%).
Outstanding household loan growth increased to 3.7% (September: 3.2%), amid higher loan disbursements across all purposes.
“For businesses, outstanding loan growth (October: 3.1%; September: 2.3%) continued to be supported by higher growth in working capital loans (October: 5.9%; September: 4.5%), which remained above its historical average,” BNM said.
Domestic financial markets were supported by a more growth outlook. In October, global investor sentiments were driven by increased expectations for the US Federal Reserve to begin tapering its asset purchase programme by the end-2021.
“Consequently, global bond yields, including the benchmark 10-year MGS yield, rose in tandem with the increase in long-term US Treasury yields,” it said.
BNM said that domestically, investor sentiments were supported by optimism over the domestic growth outlook following the easing of interstate and international travel restrictions from 11 October 2021 onwards.
As a result, the FBM KLCI increased by 1.6% and the ringgit appreciated by 1.1% against the US dollar. Higher commodity prices had also provided further support to the ringgit exchange rate.
The Banking system funding and liquidity positions remained supportive of intermediation activity. As of end of October 2021, the banking system liquidity coverage ratio (LCR) remained strong (October: 153.3%; September: 154.4%). Loan-to-fund and the loan-to-fund-and-equity ratios also remained stable at 81.6% and 71.1%, respectively.