Malaysia’s export growth slowed on an annual basis for the third consecutive month in June as the low-base effect from a year earlier normalised against a backdrop of slowing global demand.
According to a statement by the International Trade and Industry Ministry (Miti) posted on the Department of Statistics website, Malaysian exports rose 17.2% to RM52.83 billion in June 2010 from a year earlier, translating into cumulative half year external sales of RM569.31 billion, a year-on-year (y-o-y) increase of 28.9%.
On a month-on-month (m-o-m) basis, June exports increased 1.1% from May 2010.
During the month, imports expanded by 30.1% y-o-y to RM46.79 billion, translating into cumulative six-month imports of RM253.48 billion, up 32.5% from a year earlier. Compared to a month earlier, imports rose 6%.
Total trade in June rose 22.9% y-o-y and 3.3% m-o-m.
An economist said the slower growth rate in the country’s exports and imports in June were crucial signs that Malaysian external sales were weakening, as seen in the smaller increase in exports to Japan, China and the Association of Southeast Asian Nations (Asean).
“Despite the weakness, we do not expect the global economy to fall into a double dip recession even though there is a risk of a sharper-than-expected slowdown, given that policy normalisation and tightening remain gradual.
“Also, the US economic recovery is becoming more sustainable, as its recovery which started from the government stimulus and inventory rebuilding, has now spread to consumer spending,” RHB Research Institute Sdn Bhd economist Peck Boon Soon wrote in a note.
According to Miti, the increase in Malaysian exports for June 2010 was broad-based. These include higher external sales of electrical and electronic (E&E), metal, and chemical-based products, as well as optical and scientific equipment. The country also sold more commodities including oil and gas, palm oil, and rubber.
Singapore, the largest international market for local goods accounted for 13.1% of Malaysian exports. This was followed by China, the US and Japan which made up 12.6%, 10.1% and 9.7%, respectively, of total exports.
Exports within Asean rose by 7% y-o-y to RM12.97 billion, and accounted for 24.6% of Malaysian external sales during the month. Compared to a month earlier, exports to the region, however, fell 4.1%.
Higher exports of E&E products, metal-based goods, optical and scientific equipment as well as machinery, appliances and parts contributed to the annual increase.
Meanwhile, exports to China expanded by 28% y-o-y to RM6.67 billion, mainly due to higher sales of E&E products, palm oil, crude rubber, liquefied natural gas (LNG) as well as chemical-based products. Compared to a month earlier, exports to China rose 5%.
Malaysian exports to the US rose 7.2% y-o-y to RM5.35 billion, helped by higher sales of optical and scientific equipment as well as crude petroleum, which more than offset the decline in the sale of E&E products. Compared to the preceding month, exports to the world’s largest economy increased 4.5%.
Exports to Japan climbed by an annual pace of 18% to RM5.12 billion, boosted mainly by better sales of LNG and refined petroleum products. Compared with May 2010, however, exports to Japan fell 1.2%.
Meanwhile, Malaysian imports rose in June 2010 as the country bought more intermediate and capital goods. Intermediate goods accounted for the largest chunk, at 69.7% of imports, followed by capital and consumption goods at 13.7% and 6.5%, respectively.
China and Japan, the two largest suppliers of goods to Malaysia, each accounted for 13.3% of the country’s imports, followed by Singapore with 11.2%.
This article appeared in The Edge Financial Daily, August 4, 2010.
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