Matrade released the September trade figures pointing to a decline albeit at a slower pace of -12.6%yoy (Aug-23: -19.9%yoy). The slower fall was attributable to a +5.4%mom rise in monthly total trade to RM224.4b, the highest in 7 months. Exports jumped by +8.2%mom, relatively faster than the +2.1%mom increase in imports, and as a result trade surplus widened to RM24.5b.
Although exports fell further for the 7th month since Mar-23, the pace of annual contraction slowed to -13.7%yoy. The improvement was better than expected because the decline in Sep-23 was not as sharp as market predictions. In particular, E&E exports, which accounted 43.7% of total exports, recorded a slower decline. Both domestic exports and re-exports fell slower at -12.4%yoy and -17.9%yoy respectively.
Continued decline in overall exports was dragged down by weak exports of crude and refined petroleum products, E&E, palm oil & palm oil-based products and LNG, compared to a year ago. Compared to prior month, exports rebounded and surged by +8.2%mom driven primarily by stronger exports of manufactured goods, especially E&E (+25.7%mom) and optical & scientific equipment. Given the weak overseas demand, this explains the continued decline in exports relative
to a year ago. For the 3QCY23, exports of goods fell sharper at -15.2%yoy (2QCY23: -11.1%yoy).
MIDF maintains its position on the projection and forecasts that exports and imports will fall by -6.4% and -6.9%, respectively, this year. Although exports of goods recorded a sharp decline of -7.8%yoy in the first 3 quarters this year, the forecast factored in expectations for a turnaround in E&E trade which will result in a slower export decline in the coming months. As price changes will have a smaller effect going forward, we assumed continued recovery in China will be the key factor that will support the regional trade outlook.
The house expects the recovery momentum will continue and support for both exports and imports to pick up going into next year. Nevertheless, several downside risks could derail the near-term trade outlook such as the recent escalation in geopolitical tensions, uptrend in commodity prices, sharp slowdown in final demand, and renewed concerns over growth prospects in China.
