December 2023 saw continued – and larger – decline in Malaysia’s exports (Dec 2023: -10.0% YoY; Nov 2023: -6.1% YoY) but faster imports growth (Dec 2023: +2.9% YoY; Nov 2023: +1.5% YoY) resulting in a narrower trade surplus (Dec 2023: +RM11.8b; Nov 2023: +RM12.2b).
Expect 2024 exports and imports to rebound by +4.7% (2023: -8.0%; 2022: +24.9%) and +5.6% (2023: -6.4%; 2022: +31%) with +MYR213.3b trade surplus (2023: +MYR214.1b; 2022: +MYR256.2b).
Exports Still Down As Imports Picked Up Further
Maybank Investment Bank Berhad (Maybank IB), in a note today (Jan 22) said the continued drop in Dec 2023’s exports was sustained by decelines in Manufacturing (Dec 2023: -10.3% YoY; Nov 2023: -6.7% YoY; 2023: -6.8% YoY; 2022: +32.7% YoY) and Agriculture (Dec 2023: -25.9% YoY; Nov 2023: – 6.0% YoY; 2023: -22.1% YoY; 2022: +33.3% YoY) which offset the rebound in Mining (Dec 2023: +9.1% YoY; Nov 2023: -2.3% YoY; 2023: -10.2% YoY; 2022: +0.3% YoY).
Manufacturing exports declined due to lower shipments of E&E (Dec 2023: -12.1% YoY; Nov 2023; -13.8% YoY), Petroleum Products (Dec 2023: -22.2% YoY; Nov 2023: +8.2% YoY), Transport Equipment (Dec 2023: -40.4% YoY; Nov 2023: -42.9% YoY), Chemical & Chemical Products (Dec 2023: -12.7% YoY; Dec 2023: -15.7% YoY) and Optical & Scientific Equipment (Dec 2023: -7.9% YoY; Nov 2023: -12.8% YoY).
Agriculture exports fell on the back of weaker palm oil exports (Dec 2023: -27.2% YoY; Nov 2023: -13.7% YoY) amid sharper export price decline (Dec 2023: -34.1% YoY; Nov 2023: -16.8% YoY) despite faster export volume growth (Dec 2023: +10.6% YoY; Nov 2023: +3.8% YoY).
Mining exports rebounded on higher exports of crude petroleum (Dec 2023: +35.1% YoY; Nov 2023: +26.4% YoY) supported by increase in export volume growth (Dec 2023: +37.4% YoY; Nov 2023: -6.6% YoY) amid the decline in export price (Dec 2023: -1.6% YoY; Nov 2023: +35.4% YoY), while LNG exports was “flattish” (Dec 2023: -0.1% YoY; Nov 2023: -14.8% YoY) as the increase in export volume (Dec 2023: +13.6% YoY; Nov 2023: +16.8% YoY) was countered by the decline in export price (Dec 2023: -12.0% YoY; Nov 2023: -27.0% YoY).
Stronger imports were driven by the rebound in intermediate goods imports (Dec 2023: +10.1% YoY; Nov 2023: -5.6% YoY) and further growth in capital goods imports (Dec 2023: +14.5% YoY; Nov 2023: +31.1% YoY) amid declines in imports for re-exports (Dec 2023: -20.3% YoY; Nov 2023: +0.0% YoY) and imports of consumption goods (Dec 2023: -0.7% YoY; Nov 2023: +2.4% YoY).
Expect external trade rebound in 2024 from 2023 decline, on global electronic upcycle
Both exports and imports were down by -8.0% and -6.4% respectively in 2023 amid correction in commodity prices and electronics downcycle, and made worse by the base effect following 2022’s surge in exports and imports of +24.9% and +31.0% respectively. For 2024, we forecast exports and imports to rebound by +4.7% and +5.6% respectively.
A major driver for the expected exports rebound this year is the projected turnaround in electronics cycle as WSTS expects global semiconductor sales to rebound by +13.1% in 2024 (2023E: -9.4%).
