Author: Tan KW | Publish date: Tue, 7 Jun 2016, 11:31 AM
This article first appeared in The Edge Financial Daily, on June 7, 2016.
KUALA LUMPUR: Exports are likely to see stronger growth this year, according to economists, but the pace would not be robust amid the gloomy global economic outlook.
Malaysia seems to have outperformed others in the region, where a number of countries have seen a contraction in exports in April.
The country’s exports were up barely 1.6% year-on-year in April to RM61.3 billion. For the period between January and April, it expanded slower at 1.2%.
RHB Research economist Vincent Loo Yeong Hong forecasts a 3.6% growth in gross exports, compared with 1.9% in 2015. He commented that the export growth of 1.6% in April 2016 was considered an improving phenomenon, compared with 0.2% in March.
However, he noted that while the electrical and electronic (E&E) segment will still be growing, its growth rate would be under pressure due to a higher base effect last year, and the technology sector lacks catalysts currently.
The E&E segment constituted 35% of Malaysia’s total exports in April, according to the Department of Statistics Malaysia.
“The technology sector has been growing for a few years already. In fact, it did pretty well last year. So we are banking on commodities to recover because last year, they did pretty badly,” he said.
“Exports have improved, but at a weak pace, due to [a] weak global economy, which led to a decline in global trade. It does not look like it is going to recover anytime soon, but we can be comforted that Malaysia’s exports are not declining,” Loo said.
Kenanga Research economist Chan Quan Min anticipates a 2.9% export growth in Malaysia for 2016.
He noticed that measuring Malaysian exports in US dollars, April’s figures also reflected some recoveries.
“In US dollar term[s], Malaysia’s export growth in April contracted by 9.5%, but that is still encouraging because it is much lesser compared to August and September 2015, when export growth contracted by up to 20% in US dollar[s],” he explained.
AmInvestment Bank Research economist Patricia Oh Swee Ling pointed out that Malaysia had managed to register a positive growth in exports, even though most of its regional peers have had a contraction.
“That said, the year-to-date appreciation of the ringgit, lacklustre global oil market and weaker-than-expected global growth are ongoing key challenges for Malaysia’s overall trade in 2016,” she said.
In April 2016, exports in China, South Korea, Taiwan, India, Thailand, Singapore, Japan and Indonesia declined in a range from 1.8% to 12.6% year-on-year.
Nevertheless, an economist who declined to be named warned that downside pressure remains on Malaysian exports, especially in the second half of 2016, due to the high base effect resulted from an abrupt depreciation of the ringgit against the US dollar last year, which led to a sudden hike in export values.
KUALA LUMPUR: Exports are likely to see stronger growth this year, according to economists, but the pace would not be robust amid the gloomy global economic outlook.
Malaysia seems to have outperformed others in the region, where a number of countries have seen a contraction in exports in April.
The country’s exports were up barely 1.6% year-on-year in April to RM61.3 billion. For the period between January and April, it expanded slower at 1.2%.
RHB Research economist Vincent Loo Yeong Hong forecasts a 3.6% growth in gross exports, compared with 1.9% in 2015. He commented that the export growth of 1.6% in April 2016 was considered an improving phenomenon, compared with 0.2% in March.
However, he noted that while the electrical and electronic (E&E) segment will still be growing, its growth rate would be under pressure due to a higher base effect last year, and the technology sector lacks catalysts currently.
The E&E segment constituted 35% of Malaysia’s total exports in April, according to the Department of Statistics Malaysia.
“The technology sector has been growing for a few years already. In fact, it did pretty well last year. So we are banking on commodities to recover because last year, they did pretty badly,” he said.
“Exports have improved, but at a weak pace, due to [a] weak global economy, which led to a decline in global trade. It does not look like it is going to recover anytime soon, but we can be comforted that Malaysia’s exports are not declining,” Loo said.Kenanga Research economist Chan Quan Min anticipates a 2.9% export growth in Malaysia for 2016.
He noticed that measuring Malaysian exports in US dollars, April’s figures also reflected some recoveries.
“In US dollar term[s], Malaysia’s export growth in April contracted by 9.5%, but that is still encouraging because it is much lesser compared to August and September 2015, when export growth contracted by up to 20% in US dollar[s],” he explained.
AmInvestment Bank Research economist Patricia Oh Swee Ling pointed out that Malaysia had managed to register a positive growth in exports, even though most of its regional peers have had a contraction.
“That said, the year-to-date appreciation of the ringgit, lacklustre global oil market and weaker-than-expected global growth are ongoing key challenges for Malaysia’s overall trade in 2016,” she said.
In April 2016, exports in China, South Korea, Taiwan, India, Thailand, Singapore, Japan and Indonesia declined in a range from 1.8% to 12.6% year-on-year.
Nevertheless, an economist who declined to be named warned that downside pressure remains on Malaysian exports, especially in the second half of 2016, due to the high base effect resulted from an abrupt depreciation of the ringgit against the US dollar last year, which led to a sudden hike in export values.
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