Malaysia’s October exports grew more than twice as much as expected, helped by demand from key markets for electrical and electronic products and by the weak ringgit.
The country’s exports have picked up in the second half, after drops in commodity shipments following the global slide in oil and palm oil prices and a slowdown in China.
In ringgit terms, October’s exports increased 16.7 per cent from a year ago, government data showed, the highest growth since April 2014. Economists polled by Reuters forecast 7.9 per cent growth.
Malaysia reports trade data in ringgit, which has lost about 17 per cent against the U.S. dollar this year, making it Asia’s worst-performing currency.
Irvin Seah, economist at DBS in Singapore, said he would take the October growth “with a pinch of salt because of the currency valuation effect” which naturally boosts the data. “We are not seeing strong improvement in global demand,” he added.
October imports signalled that domestic demand remained weak. They contracted 0.4 percent, less than the poll forecast for a 4.3 per cent drop but a sharp contrast to September’s 9.6 per cent rise.
Malaysia’s imports have slumped most months since the government implemented a 6 percent goods and services tax (GST) in April.
Annual increases in local private consumption slowed from 8.8 per cent in the first quarter to 4.1 per cent in July-September.
In the third quarter, Malaysia posted its slowest economic growth and smallest current account surplus in over two years. The economy grew 4.7 per cent from a year earlier, compared with 4.9 per cent in the previous quarter.
A private manufacturing purchasing managers’ index (PMI) showed factory activity in Malaysia contracted for an eighth straight month in November, with demand for exports the only silver lining for the industry.
October was the fifth straight month in which exports increased. The month’s surplus was 12.6 billion ringgit (S$4.2 billion), compared with 9.69 billion ringgit in September.
Shipments to China in October were 25.9 per cent higher than a year earlier, and those to the United States surged 30.9 per cent, according to Friday’s data.
Mr Wiranto of OCBC said Malaysia is strong in producing “hot items” in tech such as sensors. “If Malaysia’s exporters continue to focus on this, they’re heading in the right direction,” he said.