Cloudy export outlook for fourth quarter

PETALING JAYA: Exports performance for the fourth quarter is likely to be weak in the fourth quarter (Q4) of the year after September’s exports saw the biggest decline in the past three years.

Exports slipped 6.8% year-on-year (yoy) to RM77.7 billion in September 2019, mainly dragged down by electrical & electronic (E&E) products (-RM4.1 billion).

Imports, however, registered an increase of 2.4% yoy to RM69.4 billion. Total trade was down 2.7% yoy to RM147.1 billion, while trade surplus shrank 46.5% yoy to RM8.3 billion.

In a report today, MIDF Research expects exports to be “quite vulnerable” with the uncertainty over trade tensions, coupled with higher base effect particularly in October 2018 would influence the overall performance in Q419.

The research house said 2019 is a contraction for exports and imports. For the first nine months of the year, exports growth averaged at -1.1% yoy. In term of absolute value, monthly average of 2019 so far recorded at RM80.9 billion which is still lower than RM83.7 billion in 2018.

“In fact, we expect further drop in exports growth in October 2019 due to high base effect factor. In addition, continuous decline in imports of capital and intermediate goods indicate weak prospects for future exports.”

Nevertheless, it expects commodity-based sector products particularly LNG exports to offset the less favourable impact from trade war in 2H19.

UOB Research also remains cautious on the export outlook over the next few months and into 2020 with leading indicators still pointing to subdued external demand and slowing global growth.

“Although the US and China are expected to sign a “Phase 1” trade deal this month, there is still a long way towards full resolution with an array of outstanding issues including technology transfer and intellectual property rights. Thus, we maintain our 2019 full-year exports forecast at -1.0%,“ it said.

Chief statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said besides E&E products, other products which attributed to the decline in exports were crude petroleum (-RM1.2 billion), refined petroleum products (-RM805.1 million), palm oil and palm oil-based products (-RM366.9 million), liquefied natural gas (-RM61.5 million) and natural rubber (-RM14.7 million).

However, timber and timber-based products increased RM101.5 million.

Meanwhile, the increases in imports by end use was mainly attributed to intermediate goods (+RM4.0 billion) followed by consumption goods (+RM777.0 million) and capital goods (+RM531.7 million).

Re-exports was valued at RM12.7 billion, registering a decline of 17.6% yoy and accounted for 16.3% of total exports. Domestic exports also declined 2.9% to RM65.0 billion.

In Q3 of 2019, exports fell 1.9% yoy to RM247 billion. Imports also registered a decrease of 5.8% yoy to RM213.5 billion.

Re-exports was valued at RM44 billion, decreasing 9.2% yoy and accounted for 17.8% of total exports. Domestic exports decreased marginally 0.2% to RM203 billion from a year ago.

source https://www.thesundaily.my/business/cloudy-export-outlook-for-fourth-quarter-CE1574361