A slowdown in Malaysia’s trade performance is expected to continue in the coming months due to China’s lukewarm economic performance and the lack of upswing in electrical and electronic (E&E) products cycle. NSTP/ASWADI ALIAS.
KUALA LUMPUR: A slowdown in Malaysia’s trade performance is expected to continue in the coming months due to China’s lukewarm economic performance and the lack of upswing in electrical and electronic (E&E) products cycle.
Malaysian Institute of Economic Research economist Dr Shankaran Nambiar said global demand has been soft and China’s lukewarm economic performance has been an important factor for the playdown in the export of palm oil as well as petroleum products.
“This is likely to continue in the coming months. Similarly, the E&E cycle is not in upswing mode, which was also reflected in our poor export numbers.
“There are no countervailing forces for the semiconductor market to show more encouraging numbers in the months ahead,” he told the Business Times.
Malaysia’s total trade contracted 19.8 per cent to RM213.01 billion in August amid slower global demand and lower commodity prices.
Its exports dropped 18.6 per cent to RM115.16 billion and imports edged down 21.2 per cent to RM97.85 billion.
The country”s trade with Asean, which comprised 27.9 per cent or RM59.46 billion of its total trade, dropped 16.3 per cent year-on-year.
Nambiar said Malaysia could look at avenues to increase inter-Asean trade.
One option of doing that is to reduce non-tariff measures, he said.
“These are measures that are probably acting as brakes to the smoother trade. And that, to a limited extent, may help improve the trade figures.
“But the overwhelming weight of the global slowdown may not be so easily shaken off,” he added.
OCBC Bank denior Asean economist Lavanya Venkateswaran said August trade data showed that external growth momentum remained lacklustre in the third quarter of 2023.
“This remains broadly consistent with our forecast for gross domestic product growth to remain subdued at four per cent in 2023.
“Despite the weaker growth outlook, we expect Bank Negara Malaysia to remain on hold for the rest of 2023,” she said in a note.