Malaysia’s total trade continued to grow in Jul-22, with trade coming in at RM252.6b, the second highest after the record high RM270.1b in June this year. Exports growth, in particular, was sustained at +38%yoy (Jun-22: +38.4%yoy), somewhat higher than analysts estimated. MIDF anticipated a recent correction in commodity prices and weaker demand from China would start to hit export performance.
The official number is better than expected, also due to the lower base in Jul-21 which explained the stronger expansion in domestic exports at +33.4%yoy (Jun-22: +30.5%yoy). Re-exports, on the other hand, moderated to +55.1%yoy (Jun-22:
+70.9%yoy). Overall, export growth in Jul-22 was driven by major products such as E&E, petroleum (both processed and crude oil), palm oil, and LNG. Meanwhile, imports growth remained positive but moderated to +41.9%yoy (Jun-22: +49.2%yoy). Increased imports, which have been growing at a double-digit pace in the last 18 months, reflect the improving domestic economic activities as Malaysia transitioned into the endemic phase.
Maintain growth forecast for exports and imports at +20.9% and +25.6%, respectively.
Although the Jul-22 numbers were better than expected, we maintain our forecast for exports and imports to grow at +20.9% and +25.6%, respectively, this year. Trade outlook may be adversely impacted by weaker global growth in view of downside risks from higher global inflation, possible recession in the US, sluggish recovery and strict zero-Covid policy in China, ongoing war in Ukraine, and the recent escalation of geo-political tension between China and Taiwan.
Nevertheless, MIDF foresees sustained recovery in the global economy, as countries reopen their economies and ease Covid-19 restrictions, will continue to drive external demand for manufactured goods (i.e. E&E and refined petroleum) and primary commodities. Meanwhile, it expects imports to expand further in the coming months as growth momentum in the domestic economy is expected to continue in the latter part of the year.
