Export growth moderated sharply to single-digit growth in December to 6.0% from Nov 15.1%, this was lower than expectations says Kenanga− MoM (1.7%; Nov: -1.5%): rebounded, following two straight months of contraction, and likely due to seasonal factors amid festive season spending. − 4Q22: growth slowed to an eight-quarter low. − 2022 moderated slightly and below the house forecast of 27.0%.
Growth moderated due to a slowdown among major trading partners, and key sector − By destination: due to subdued demand from China and slower growth by other trading partners. However, growth was partially mitigated by an expansion to the EU. By sector: broad-based slowdown led by a contraction in agriculture, followed by a moderation in manufacturing and mining sectors.
Imports moderated for the fourth straight month to 12.0%, lower than expectations due to a slowdown in re-exports and retained imports. By category, the slower import growth was mainly weighed by a contraction in capital goods and a slowdown in the import of intermediate goods as well as consumption goods. On a MoM basis, imports plunged for the second straight month − 4Q22: Meanwhile, imports slowed sharply to a seven-quarter low.
Trade surplus expanded to RM27.8b, beating expectations due to MoM fall in imports, while exports rebounded. − As a result, the trade surplus settled at RM67.6b in 4Q22 , the highest since 4Q21, with a fullyear surplus expanded to RM255.1b, a record high.
Meanwhile, total trade moderated in December the lowest growth since January 2021. Overall, trade activity expanded in 2022 thanks to a further resumption in global economic activity. 2023 export growth forecast retained at 5.8% amid the rising risk of a global growth slowdown Given the moderation in export performance during the last quarter, we retained the 4Q22 GDP growth forecast t moderate sharply to 6.6%, with 2022 GDP growth to settle at 8.6%.
Moving forward, Kenanga said it still expects growth to grow at a moderate pace amid the dissipation of a lower base effect and normalisation in economic activities. Nevertheless, downside risk to export growth remains surrounded by slower than expected external demand and weak commodity prices due to the lingering risk of recession among major economies as a
result of tighter financial conditions and inflation concerns. That said, the house retains its GDP growth forecast at 4.3% for 2023.
