OCBC Malaysia Senior ASEAN Economist Lavanya Venkateswaran commented on the January trade figures released by MATRADE, where the country saw a rebound of 13.3% yoy.
Notably, export growth picked up more-than-expected to 8.7% YoY in January versus -10.1% in December (Consensus: 3.0%; OCBC: 6.6%). The pickup was driven by chemicals, palm oil, ‘machinery, appliances & parts’ and ‘optical and scientific equipment’. The contraction in electronics export growth narrowed to -6.5% YoY versus -12.1% in December.
By destination, export growth to all key destinations picked up with the exception of China. Export growth to EU, US, Australia, Japan, South Korea, Taiwan picked up in January more than offsetting weak growth to China (-7.4% YoY versus -1.5% in December) and Hong Kong SAR (-7.9% YoY versus -9.1% in December).
Import growth was solid at 18.8% YoY in January versus 2.9% in December, far outpacing expectations (Consensus: 8.0%; OCBC: 7.2%). By end use, the pickup was broad based across capital (41.8% YoY versus 23.7% in December), consumer (25.4% versus -0.7% in December) and intermediate (21.4% versus 10.2%) goods.
Lavanya said the strong start to January trade data bodes well for the bank’s view that export growth will improve in 2024, notwithstanding monthly fluctuations. OCBC expects support to export growth from the bottoming out of the global electronics export downcycle in 2H24. Importantly, the strong import growth underscores resilient domestic demand conditions for investment and consumption spending.Â
The bank maintains its 2024 GDP growth forecast of 4.2%. From a monetary policy standpoint, it expects Bank Negara Malaysia to keep its policy rate unchanged at 3.00% in 2024.
