Analysts expect growing foreign demand for E&E and commodities, especially palm oil and oil and gas, will support expansion in exports in the coming months.
KUCHING: The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) has revised its growth projection higher for both exports and imports to 7.8 per cent and 9.6 per cent, respectively, amid the double-digit expansion in January-February 2022.
MIDF Research recapped that Malaysia’s total trade rose by 17.5 per cent year on year (y-o-y) to RM184.8 billion in February 2022.
“Total trade fell below RM200 billion for the first time in five months as exports and imports both decreased from the previous month,” the research arm gathered.
“On a year-on-year basis, exports growth moderated to 16.8 per cent y-o-y (January 2022: 23.9 per cent y-o-y) but maintained double-digit growth since August 2021.”
While the moderation in the external trade has been in line with MIDF Research’s expectations, the pace of growth for both exports and imports has been stronger than projected, with the double-digit expansion in January-February 2022.
“As a result, we revise our growth projection higher for both exports and imports to 7.8 per cent and 9.6 per cent, respectively.”
After strong growth last year, the research arm opined that the growth rate will moderate this year due to the diminishing low-base effect.
“Overall, we expect growing foreign demand for electrical and electronics (E&E) and commodities, especially palm oil and oil and gas, will support expansion in exports in the coming months.
“In addition, Malaysia stands to benefit from high commodity prices and further economic reopening in Malaysia and other countries.
“However, the risk from prolonged supply chain disruptions following the reimposition of lockdown in China and the war in Ukraine could constrain global production and trade activity.
“Moreover, the outlook for external demand could also be weighed down by elevated inflation given the high prices of energy and other commodities.”
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