The Ministry of International Trade and Industries released the November export figures with Malaysia once again registering expansion. Export growth expanded slightly (15.6% YoY; Oct: 14.9%), beating analysts’ consensus (13.7%) but lower than the house forecast (19.2%). On a month-on-month (-1.0%; Oct: -8.8%): growth contracted for the second straight month, albeit at a slower pace, suggesting weak external demand in the 4Q22, amid rising global economic uncertainties and tighter financial conditions.
Kenanga notes that growth expansion was supported by continued demand from major trading partners and the manufacturing sector. By destination, trade was contributed by key trading partners led by SG (36.3%; Oct: 26.4%), followed by JP (31.6%; Oct: 25.7%), EU (16.3%; Oct: 6.9%), the US (11.8%; Oct: 8.8%) and CN (9.2%; Oct: 4.3%). − By sector: mainly attributable to an expansion in manufacturing (15.0%; Oct: 12.5%) sector, but partially capped by weak agriculture (-11.1%; Sep: -6.8%) and a slowdown in mining (62.6%; Oct: 85.8%) sectors.
Imports moderated for the third straight month to 15.6% (Oct: 29.1%), lower than expectations (KIBB: 27.2%; consensus: 21.7%) due to a sharp slowdown in retained imports (9.1%; Oct: 28.3%) − By category, the slower import growth was attributable to the lower import of intermediate goods (8.2%; Oct: 26.4%) and capital goods (3.2%; Oct: 41.2%) but partially mitigated by an expansion in consumption goods (23.6%; Oct: 21.6%). On a MoM basis, imports plunged (-4.9%; Oct: 1.0%).
Trade surplus expanded to RM22.3b (Oct: RM18.1b), beating expectations (KIBB: RM15.6b; consensus: RM15.6b). The higher-than-expected trade surplus was mainly due to a larger MoM contraction in imports (-4.9%), which exceeded exports (-1.0%). Overall, total trade moderated (15.6%; Oct: 21.1%), the lowest growth since February 2022.
December’s exports may grow lower than expected amid a heightened global economic slowdown. That said, the final 2022 exports reading may settle lower than the house forecast (KIBBf: 27.0%; 2021: 26.1%) − Year-to-date, exports expanded by 27.2% YoY, mainly due to continued demand from key trading partners and contributed by the weaker Ringgit (averaged Nov: 4.62; Oct: 4.70). The expansion in export growth was also attributable to steady commodity prices amid rising geopolitical tensions as well as easing supply-chain pressures.
Despite moderating export growth trends, Kenanga has retained the 2022 GDP growth forecast at 8.6% (2021: 3.1%) as growth is likely to be supported by strong domestic demand amid a gradual pick-up in economic and social activities post-pandemic. The research house retains its cautious growth outlook for 2023, with the GDP growth forecast retained at 4.3%, taking into account the imminent prospect of a global economic slowdown and the impact of tighter financial conditions amid global monetary policy tightening.
