Malaysia: Merchandise exports decline at outset of 2020
March 4, 2020
Merchandise exports fell 0.8% year-on-year in USD terms in January, contrasting December’s 3.9% increase (previously reported: +4.0% year-on-year). In ringgit terms, exports fell 1.5% in January (December: +2.7% yoy), which was slightly softer than the 1.6% contraction expected by market analysts.
A decline in exports of electrical and electronic products and a sharp decline in LNG underpinned January’s decline. On the upside, stronger exports of refined petroleum products, and palm oil and palm oil-based products cushioned the downturn. Looking at Malaysia’s top export markets, demand from Thailand, China, Hong Kong, and the EU waned in January.
Imports also contracted in USD terms in January (January: -1.7% yoy; December: +2.2% yoy), due to a sharp decline in imports of capital goods and a softer fall in consumer goods imports. On the upside, imports of intermediate goods and consumption goods increased in January.
The trade surplus rose to USD 2.9 billion in January from USD 2.8 billion in January 2019, but was down from the USD 3.0 billion surplus in December. Meanwhile, the 12-month moving sum of the trade surplus rose to USD 33.3 billion in January from USD 33.2 billion in December.
Malaysia’s external sector appears to remain depressed in the first half of the year as the outbreak of coronavirus has heavily weighed on global supply chains and Chinese activity, which will surely take a toll on Malaysian exports.
Author: Lindsey Ice, Economist