March exports exceed estimates

Transcription

1 Dr. Mohd Afzanizam Abdul Rashid Chief Economist March exports exceed estimates Facts Malaysia s exports posted a double growth for four straight months in March. Total exports grew by 24.1% y-o-y (Bloomberg consensus: 20.0%, Bank Islam: 21.6%) to RM82.6 billion during March from 26.6% previously. Export growth was broad based led by 21.2% (26.6% in February) expansion in Electrical & Electronics (35.4% of total exports). This followed by Palm Oil (7.8% of total exports) as well as Oil & Gas related products such as Petroleum Products (5.7% of total exports) and Liquefied Natural Gas (4.1% of total exports) with growth of 25.3% (February: 62.8%), 32.7% (February: 29.8%) and 11.5% (February: 2.1%) respectively. In addition, exports to key economies recorded higher growth in March. For instance, exports growth to Singapore (14.2% of total exports) rose 25.9% (February: 25.6%). Likewise, shipments to China (13.3% of total exports), the European Union (10.4% of total exports) and the US (9.6% of total exports) accelerated to 40.3% (February: 47.6%), 28.1% (February: 26.6%) and 16.5% (February: 13.2%) respectively. Meanwhile, total import growth surged to 39.4% in March from 27.7% in the preceding month. Growth in Capital Goods imports saw a marked rise to 82.4% from a mere 5.6% previously while import growth of Intermediate Goods sustained a double digit pace for three consecutive months to 36.3% (February: 39.9%). The same is also true for import of Consumption Goods which grew by 14.0% after contracting 0.6% previously. Given the strong import, trade surplus balance narrowed to RM5.4 billion from RM8.7 billion in the previous month. In the 1Q2017, total exports expanded by 21.4% from 3.3% previously owing to better performance in both commodities and non commodities space. Total imports also showed commendable performance in March when it grew by 27.7%, bringing the trade surplus balance lower to RM18.9 billion (4Q2016: RM27.5 billion) during quarter under review. Chart 1: Malaysia s trade performance y-o-y% 50.0% 40.0% Trade bal. (RM bn) (rhs) Export Import % % % % % % - Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 For Internal Circulation Page 1

2 Chart 2: Total exports in RM billion Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Chart 3: Export & Import Index by volume 20.0% 15.0% 10.0% 5.0% 13.2% 5.4% 0.0% -5.0% -10.0% Export Index Import Index -15.0% Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Chart 4: Exports destination - % of total in March 2017 Philippines, 1.8% Vietnam, 3.3% Germany, 3.0% Australia, 3.4% Singapore, 14.2% Others, 22.7% China, 13.3% EU, 10.4% US, 9.6% Japan, 8.4% Hong Kong, 4.7% Thailand, 5.2% For Internal Circulation Page 2

3 Our view The latest trade report was definitely a pleasant surprise. This is especially true when domestic economy especially the consumers are grappling with higher cost of living which has significant impact to their sentiments. The latest survey by MIER showed that Consumer Sentiment Index (CSI) slightly improved to 76.6 points in the 1Q2017 from 69.8 points previously. However, the index level generally below the benchmark 100 points which suggests that the pessimists are still outnumbered the optimists (see Chart 5). Therefore, improving external demand would offset weaknesses from the domestic economy in the 1Q2017. Another take away from this is the strong rise in import of Capital Goods which indicates that investment activities especially the private firms would continue albeit cautiously. The implementation of infrastructure projects such as MRT2, LRT3 and expressways are expected to result higher demand for machinery and equipment. Last year, a total of RM56.4 billion domestic contracts were awarded to contractors and this should translate into more activities in the construction sector. Likewise, semiconductor players such as Globetronics and MPI have indicated they might increase capital expenditure in The 1Q2017 GDP will be announced on 19 May. We would provide our GDP estimates after the release of Industrial Production Index (IPI) sometime next week. Chart 5: Consumer Sentiment Index Q 09 1Q 10 1Q 11 1Q 12 1Q 13 1Q 14 1Q 15 1Q 16 1Q 17 For Internal Circulation Page 3

4 Table 1: Malaysia s trade Y-o-Y% Jan-17 Feb-17 Mar-17 1Q Q Q Q Q 2017 Export 13.6% 26.6% 24.1% 2.7% 1.6% -2.3% 3.3% 21.4% Import 16.1% 27.7% 39.4% -0.2% 2.7% 0.0% 5.4% 27.7% Trade balance (RM bn) Export by product Electrical & Electronic Products 11.4% 22.6% 21.2% 4.0% 3.4% -0.8% 7.9% 18.4% Palm Oil 23.4% 62.8% 25.3% 6.8% -0.8% 8.2% 17.0% 37.1% Liquefied Natural Gas 2.8% 2.1% 11.5% -32.6% -28.0% -28.9% -20.7% 5.5% Petroleum Products 85.8% 29.8% 32.7% -7.7% 31.9% 7.9% 23.5% 49.4% Machinery, Appliances and Parts -8.3% 10.9% 8.4% 23.4% 10.3% -3.1% -8.3% 3.7% Crude Petroleum 48.1% 50.4% 74.1% -20.4% -24.5% -1.4% -6.0% 57.5% Optical and Scientific Equipment 0.2% 14.3% 15.2% 16.0% 16.1% 8.4% 3.3% 9.9% Professional, Sci. & Controlling Inst. -0.6% 13.0% 15.4% 19.4% 18.8% 11.1% 3.8% 9.2% Rubber Gloves 11.0% 25.4% 41.5% 6.6% 2.5% -2.1% -0.1% 26.0% Heating and Cooling Equi.& Parts -0.3% 0.1% -17.4% 29.7% 27.0% -2.8% -10.9% -5.8% Export by country Singapore 18.6% 25.6% 25.9% 2.7% 8.3% 5.1% 7.0% 23.4% China 31.6% 47.6% 40.3% 2.4% -16.3% -8.2% 12.6% 39.8% EU 12.1% 26.6% 28.1% 8.1% -0.1% -3.3% 2.1% 22.2% US 5.6% 13.2% 16.5% 13.6% 17.5% 4.7% 2.7% 11.8% Japan 23.2% 19.9% 12.0% -16.0% -7.8% -13.0% -12.7% 18.4% Thailand 1.9% 29.7% 16.6% 6.5% -6.5% -0.9% 0.0% 16.1% Hong Kong 4.9% 7.2% 16.6% -1.5% 2.9% -1.3% 10.6% 9.6% Australia 43.5% -3.0% 14.4% -4.9% 3.0% -5.1% -3.5% 18.3% Germany 22.9% 20.7% 30.8% 25.6% 13.8% 3.6% 15.6% 24.8% Vietnam 44.2% 64.1% 36.3% 23.8% 58.0% 30.8% 32.2% 48.2% Philippines 21.1% 9.9% 25.5% 18.3% 9.6% -7.9% 0.8% 18.8% Import by end-use Capital 34.9% 5.6% 82.4% -11.5% 10.6% 17.0% 7.2% 41.0% Intermediate 10.5% 39.9% 36.3% -3.3% -1.1% 0.1% 4.3% 28.9% Consumption -1.6% -0.6% 14.0% 24.3% 10.3% -0.4% -0.3% 3.9% Table 2: Regional export performance y-o-y% Exports Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 1Q Q Q Q Q 2017 India (8.0) (2.4) (0.8) China (6.5) (0.7) (0.2) South Korea (13.4) (6.6) (4.5) Taiwan (12.1) (6.1) Thailand (4.2) Singapore (7.9) 0.4 (5.2) Malaysia (2.3) Source: Bloomberg For Internal Circulation Page 4

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