RAM Ratings expects Malaysia’s exports to further accelerate in July; wary of incoming headwinds to growth

Published on 04 Sep 2018.

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RAM Ratings expects Malaysia’s export growth to pick up to 12.4% in July (June: 7.6%), possibly supported by some frontloading activities ahead of the second tranche of US import tariffs on China’s technology goods which came into effect on 23 August 2018. Global demand for electronics, one of the key anchors of Malaysian exports, as proxied by global semiconductor shipments, also exhibited resilient growth that supported the underlying export momentum in July.

On the other hand, import growth is envisaged to moderate to 8.6% in July following a steep rebound in the preceding month (14.9%) which had partly stemmed from a boost in investment goods imports on the back of the zerorisation of the GST. While support from the tax holiday remains, July’s import print is unlikely to mirror the surge in June in view of the increasing uncertainties over escalating trade disputes. Overall, the trade surplus is projected to come in at RM11.7 billion for the month.

Looking ahead, the upside to trade growth in 2H 2018 appears limited, considering the various signs of softening observed. Growth in electronic goods orders of key economies like Japan, Singapore and the US has been on a decelerating trend for the past 12 months as restocking activities slowed following robust growth last year. The global industrial momentum has also leaned towards moderation, as suggested by the slower increase in new manufacturing orders in the US, EU and China, which would weigh on demand for Malaysia’s exports in 2H 2018. China, the EU and US constituted a respective 13.5%, 10.2% and 9.5% of Malaysia’s total exports in 2017 – the second, third and fourth largest markets. “US manufacturing orders took a dive in June despite economic growth momentum holding ground. This is one of the first signs we’ve seen of how lingering trade policy uncertainties have materialised into actual economic outcomes,” said Kristina Fong, RAM’s Head of Research.


Analytical contact
Woon Khai Jhek, CFA
(603) 7628 1093

Media contact
Padthma Subbiah
(603) 7628 1162


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Published by RAM Rating Services Berhad
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Publication Date Published Category
Economic Insight: July 2018 Foreign Trade 04-Sep-2018 Economic Insight View PDF