Malaysia Trade June 2019


Malaysia: Exports post a sharper contraction in June in USD terms

August 2, 2019

Exports plunged 7.3% year-on-year in June in USD terms, worse than May’s 2.9% decline. Moreover, in ringgit terms, exports fell 3.1% year-on-year, confounding market analysts’ expectations of a small expansion and driven by reductions in timber and electronics exports. June’s figure rounded off a weak Q2, with exports likely hit by waning global demand for electronics and U.S.-China trade tensions.

Imports, meanwhile, plummeted 13.2% in June in USD terms, worse than May’s 3.9% drop. In ringgit terms, imports decreased 9.2%, due to lower capital, intermediate and consumption goods imports.

Consequently, the trade surplus increased to USD 2.5 billion in June from 2.2 billion in May, and also widened compared to the USD 1.5 billion surplus recorded in June 2018. The 12-month moving sum of the trade surplus in June, meanwhile, ticked up to USD 30.8 billion from USD 29.8 billion a month earlier.

Commenting on what the trade data could mean for monetary policy, analysts at Nomura commented: “By country, as we expected, demand from tech-oriented countries like Japan and Singapore dropped significantly, but importantly, exports to China also plunged to -12% […] We maintain our 2019 GDP growth forecast of 4%, down more significantly from 2018’s 4.7% […] We therefore continue to expect another 25bp policy rate cut by Bank Negara Malaysia (BNM) to 2.75%, most likely to be delivered at BNM’s September meeting.”

FocusEconomics Consensus Forecast panelists expect exports to contract 1.5% and imports to decline 1.2% in 2019, with the trade surplus reaching USD 28.8 billion. In 2020, our panelists see export and import growth at 4.2% and 4.7% respectively, with the trade surplus reaching USD 28.9 billion.

Author:, Economist

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Malaysia Trade Chart

Malaysia Trade12m June 2019

Note: 12-month trade balance in USD billion and annual variation of the 12-month sum of exports and imports.
Source: Department of Statistics Malaysia (DSM) and FocusEconomics calculations.

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