Exports Exceed Market Expectations
09 Aug 2012 10:30 AM

KUALA LUMPUR: Malaysia's exports surged in June, pointing to a better outlook for the economy in the second quarter.

However, economists cautioned that the strength in external demand is not likely to last, given the uncertainties hovering in the global economy.

Exports exceeded market expectations and a Business Times poll, registering a growth of 5.4 per cent to RM60.97 billion compared with June 2011, while imports increased by 3.6 per cent to RM51.78 billion.

The International Trade and Industry Ministry (Miti) said exports of manufactured goods rose by 5.8 per cent and electrical and electronic products, which is the largest sub-sector with a 33.6 per cent share, registered a 2.1 per cent increase.

Dr Chua Hak Bin of Bank of America Merrill Lynch described June's numbers as healthy expansion although imports grew at a slower pace.

Exports to China (13.2 per cent), Japan (24.9 per cent), Hong Kong (12.8 per cent) and Australia (15 per cent) improved although exports to the United States and Singapore remained "relatively soft".

"Export readings remained weak in July, suggesting that exports may come under pressure in the coming months."

In South Korea, exports contracted in July (-3.7 per cent) and similarly in Taiwan, exports contracted by 3.2 per cent.

Recent regional Purchasing Managers Index figures have stagnated or dipped slightly, while a patchy US recovery, Europe's deepening recession and China's slowdown will likely continue to weigh on exports.

Santitarn Sathirathai of Credit Suisse said what was most surprising in June's export data was the continued improvement in electronics exports.

It grew 1.3 per cent on a sequential basis (from 0.2 per cent in May), while other electronic exporters such as Thailand, Singapore and Taiwan did not see good electronic prints in June.

This, he said, continued to help offset the weakness in palm oil exports over the past few months.

"However, there are signs that the electronic export momentum is weakening. Given that Taiwan's July electronic exports were soft, it is likely that we will see sequential growth in Malaysia's electronics exports - which moves closely with that of Taiwan - weakening in the third quarter as well."

Sathirathai expects the gross domestic product growth to be driven mainly by robust domestic demand, reflecting ongoing investment as part of the Economic Transformation Programme, as well as the pre-election cash handouts to boost private consumption.

His second quarter forecast will remain around five per cent year-on-year.

Meanwhile, Chua noted that the trade surplus widened sharply to RM9.2 billion on weaker imports, against the decade-low surplus of RM4.6 billion in May.

Together with the flat foreign reserves data in July (US$134.4 billion versus US$134.2 billion in June), this may remove some concerns about balance of payments pressure because of capital flight, he remarked.

Miti said for the first six months of 2012, exports rose by 4.2 per cent, while imports grew by eight per cent.

Manufactured goods expanded by 1.9 per cent, mining goods (liquefied natural gas and refined petroleum products) by 23 per cent, but agricultural goods (crude rubber and palm oil) contracted by 10.2 per cent.

The top export destinations between January and June were Singapore, China, Japan, the US and Thailand.

Link : http://www.btimes.com.my/Current_News/BTIMES/articles/8JUNXP/Article/