With the slower-than-expected commerce seen in January, MIDF Research is maintaining its prediction for both exports and imports to rise at 9.2% and 9.5% year-over-year (y-o-y), respectively.
According to the report, the slowdown in growth is a result of the high base year before, but the positive growth shows that demand for commodities, particularly petroleum and palm oil as well as electrical and electronic goods (E&E), is growing abroad.
We predict that the significantly lower oil prices will have an impact on exports of mining goods at least until the first half of 2023, much as the price effect has on palm oil exports (1H).
We think Malaysia, like other trade nations, would benefit from the recovery in Chinese export demand, which is projected to rise as China reopens its economy after stringent lockdowns last year.
It anticipates that as a result of the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), commerce with countries that have free trade agreements would also increase (CPTPP).
The trade picture may be weaker than anticipated, but MIDF Research is still concerned about this possibility due to potential downside risks like a sustained decline in global demand, high inflation, an increase in geopolitical unrest, and a trade war.
According to
Export Import Data, the overall amount of commerce increased in January by 1.9% year over year to RM207.51 billion, the weakest growth since November 2020.
Export increased by 1.6% to RM112,84 billion, falling short of MIDF Research and market projections. The trade surplus decreased to RM18.2 billion, a three-month low due to the reduction in exports.
