Malaysia’s exports rose 12.1% yoy in Aug, higher than what CGS forecasts and Bloomberg consensus expectations. Exports of manufactured goods rose 14.1% yoy, higher than the 10.6% in Jul, boosted by higher shipments of machinery, equipment and parts, electrical and electronics products (E&E), as well as optical and scientific products. Exports of agriculture products rose by 19.4% yoy in Aug, driven by higher shipments of palm oil and palm oilbased products (18.2% yoy). Meanwhile, imports grew at a faster pace of 26.2% yoy in Aug (vs. 25.4% in Jul), driven by higher imports of intermediate goods (40.4%), capital goods (39.6%) and consumption goods (21.2%).
Robust shipments in Malaysia’s key exports markets
By destination, Aug’s exports to the US (which accounted for 15.2% of Malaysia’s total exports for the month) rose a record-high 45.5% yoy. This was driven by strong shipments of E&E products, metal and machinery, equipment and parts as well as palm oil and palm oil-based products, signalling improvement in trade prospects ahead, in our view. Furthermore, exports to China (12% of Malaysia’s total exports) increased by 4.8% yoy, after 2 months of contraction, also driven by strong shipments of E&E products. Exports to Taiwan have also risen significantly (Aug: 75.1% yoy) since Jan 24 following higher exports
of E&E products.Gloves are main beneficiaries of new US tariffs
The recent US-China tariff scuttle may be beneficial for Malaysia’s exports. Last Friday, the US Trade Representative (USTR) revised tariffs on China, including quadrupling tariffs on China-made gloves, while maintaining the tariff rate on semiconductors and solar panels, among others. The USTR also brought forward the proposed timeline for the implementation of the new tariffs from Jan 2026 to Jan 2025 (for select products). These actions may have a positive effect on Malaysia’s trade, it said. In particular, the demand for gloves is likely to soar over the next few months. The broking house gloves analyst expects an increase in orders for gloves with higher shipments expected within the next 3 months. However, rubber gloves accounted for 1.1% share of exports in Jul. Overall, the faster implementation of new tariffs could also encourage more foreign companies to diversify into Malaysia and could be beneficial for the country’s trade in the long run, it said.
Both goods and services to support current account
CGS said it maintains 2024F export growth forecast at 9.0% yoy (2023: -8.0%), supported by an improvement in trade conditions following the 7M24 seasonally adjusted export volume growth of 0.4% yoy vs. -4.2% in 7M23. Meanwhile, seasonally adjusted import volume growth was 15.8% yoy in 7M24 vs -6.1% yoy in 7M23 (Aug data yet to be released). As for the current account, a recovery in the services account following an increase in foreign tourist arrivals could further support current account surplus in tandem with an improvement in the global demand for goods. The house maintains its 2024F current account forecast at 2.7% of GDP (2.5% of GDP in 2025).
