Exports growth moderated to 3.4% in May

Transcription

1 Dr. Mohd Afzanizam Abdul Rashid Chief Economist Mohd Sazlee Hidayatullah Intern Exports growth moderated to 3.4% in May Facts Malaysia s export grew considerably slower by 3.4% y-o-y in May after surging 14.0% in the preceding month. The growth performance was also lower than the Bloomberg median estimates of 6.4% (Bank Islam: 6.4%). Export growth was generally driven by overseas shipment in the Liquefied Natural Gas (LNG) which grew significantly by 61% after having a decline by 12.5% previously. Other main contributors also includes the Crude Petroleum and the Manufactures of Metal segments which both having export growth by 45.8% (April: 22.7%) and 44.7% (April: 42.9%) respectively. However, exports of Electrical and Electronics (E&E) posted 2.1% growth after posting 21.3% expansion in April and such performance offset the strong performance of commodities related exports. By countries, exports to China expanded by 7.4% (April: 22.0%) which amounted to RM11.53 billion. This is mainly due to the increase in exports of chemicals product and manufacturers of metal. Japan shows major improvements from the previous months as exports grew by 16% after staging three consecutive months of contraction. This was on the back of higher exports of Liquefied Natural Gas. On the contrary, total exports to the US fell by 5.6% (April: 1.7%) due to the decline exports of Electrical and Electronic as well as petroleum product. Total import recorded a flat growth of 0.1%, y-o-y. There is a decline in y-o-y growth for the three main categories of end-use imported goods in May: Intermediate goods: -5.3% (April: -11.9%), Capital goods: -0.7% (April: 4.8%) and Consumption goods: -10.2% (April: -1.8%). For the first five months of 2018, total exports amounted to RM404.0 billion, rose by 6.9% (5M2017: 23.4%) compared to the same period in Meanwhile, imports grew at a much slower rate at 1.3% (5M2017: 27.6%), totaling to RM349.5 billion. Consequently, trade surplus balance widened to RM54.5 billion from RM33 billion in the same period last year. For Internal Circulation Page 1

2 Chart 1: Export and Import y-o-y% 50.0% Trade bal. (RM bn) (rhs) Export Import % % % % % % % - May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Chart 2: Exports and imports in RM billion Exports Imports May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Chart 3: Export Volume Index (EVI) y-o-y% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Source: Bloomberg For Internal Circulation Page 2

3 Our view Stable trade performance in May suggests the Malaysian economy would continue to perform favourably in the near terms. This was premised on the Global Purchasing Managers Index (PMI) for manufacturing sector which continue to hover above the 50 points demarcation line. At the same time, higher commodity prices namely the crude oil and LNG are expected to positively contribute to the rise in Oil and Gas exports. Nonetheless, the contraction in import growth indicates that domestic activities, in particular investment among firms are gradually taking a backseat. This would mean companies are taking a cautious view to expand its production capacity given the heightened uncertainties on the final demand. This is especially true in the of construction industries following the deferment and cancellation of mega projects. Apart from that, the persistent contraction in the imports of intermediate goods would also mean that exporters are quite mindful on the foreign demand especially in the Electrical and Electronics (E&E) space. The recent IDC Worldwide Quarterly Mobile Phone Tracker showed that the global smartphone sales have declined by 2.9% in the 1Q2018. The IDC highlighted that the abundance of ultra-high-end flagships with big price tags released over the past months has most likely halted the upgrade cycle in the near term. It now looks as if consumers are not willing to shell out this kind of money for a new device that brings minimal upgrades over their current device. At this juncture, it is really important to be cautious with what is happening in the US trade policies. The Trump administration is imposing additional import tariff that aimed to reduce the trade deficits. Such policy response would ultimately induce uncertainties among the business communities. Additionally, companies operating in the UK have also become increasingly wary over slower progress in the Brexit negotiation. As such, the external demand in the 2H2018 looks increasingly challenging. Table 1: Global smartphone sales Million units 1Q Q Q Q Q 2018 Samsung Apple Huawei Xiaomi OPPO Others Total Market share 1Q Q Q Q Q 2018 Samsung 23.3% 23.4% 22.3% 18.4% 23.4% Apple 14.8% 12.0% 12.5% 19.2% 15.6% Huawei 10.0% 11.3% 10.5% 10.2% 11.8% Xiaomi 4.3% 6.2% 7.4% 7.0% 8.4% OPPO 7.5% 8.1% 8.2% 6.8% 7.1% Others 40.2% 39.1% 39.1% 37.5% 33.7% Total 100.0% 100.0% 100.0% 100.0% 100.0% Y-o-Y% 1Q Q Q Q Q 2018 Samsung 1.1% 1.5% 9.5% -4.4% -2.4% Apple -0.8% 1.5% 2.6% -1.3% 2.8% Huawei 22.8% 19.6% 16.0% -9.7% 13.9% Xiaomi na 59.4% 102.9% 96.5% 89.2% OPPO 31.0% 22.5% 19.0% -13.3% -7.4% Others -10.5% -16.0% -13.6% -17.6% -18.5% Total 3.5% -1.3% 2.7% -6.3% -2.9% Source: IDC Worldwide Quarterly Mobile Phone Tracker For Internal Circulation Page 3

4 Appendix Trade Statistics Y-o-Y% Jan-18 Feb-18 Mar-18 Apr-18 May-18 5M M 2018 Export 17.9% -2.0% 2.2% 14.0% 3.4% 23.4% 7.1% Import 11.6% -2.8% -9.6% 9.2% 0.1% 27.6% 1.7% Trade balance (RM bn) Export by product Electrical & Electronic Products 27.2% -0.1% 8.8% 21.3% 2.1% 21.8% 11.9% Palm Oil 10.4% -21.6% -6.6% 0.2% -15.4% 32.5% -6.6% Liquefied Natural Gas 14.0% -11.8% -3.3% -12.5% 61.0% 14.5% 9.5% Petroleum Products 2.1% 29.1% -8.6% 38.9% 10.0% 41.6% 14.3% Machinery, Appliances and Parts 10.3% -7.5% 3.6% 3.9% -11.5% 5.0% -0.3% Crude Petroleum 0.1% 3.0% 18.4% 22.7% 45.8% 59.0% 18.0% Optical and Scientific Equipment 18.0% 11.7% -0.2% 7.7% 13.4% 11.0% 10.1% Professional, Sci. & Controlling In 16.7% 16.8% 1.1% 9.1% 15.7% 11.1% 11.9% Rubber Gloves 10.0% 4.7% -1.3% 2.9% 2.4% 28.6% 3.7% Heating and Cooling Equi.& Parts -1.7% -19.1% 20.0% -18.2% -34.6% -2.0% -10.7% Export by country Singapore 8.1% -6.0% -4.3% 3.7% -9.8% 26.2% -1.6% China 17.9% -9.7% -4.7% 22.0% 7.4% 44.3% 6.6% EU 13.6% -3.0% 5.3% 19.5% 11.4% 24.6% 9.3% US 8.7% 3.3% -0.1% 1.7% -5.6% 12.5% 1.6% Japan 3.3% -17.2% -3.5% -21.4% 16.0% 22.5% -4.6% Thailand 16.8% -3.1% 9.5% 32.4% 18.4% 17.9% 14.8% Hong Kong 129.9% 61.2% 62.1% 113.8% 34.8% 11.4% 80.3% Australia -19.6% 15.8% -11.8% -14.5% -6.9% 24.8% -7.4% Germany 18.8% 1.4% 9.8% 19.2% 34.9% 24.8% 16.8% Vietnam 64.5% 24.8% -3.6% 44.2% 41.3% 27.9% 34.2% Philippines 7.1% -5.1% -10.4% 13.6% -4.1% 20.8% 0.2% Import by end-use Capital -3.1% 6.5% -30.4% 4.8% -0.7% 29.0% -4.6% Intermediate -1.7% -14.8% -14.5% -11.9% -5.3% 29.9% -9.6% Consumption 9.8% 12.6% -12.5% -1.8% -10.2% 4.2% -0.4% For Internal Circulation Page 4

5 Produced and issued by BANK ISLAM MALAYSIA BERHAD (Bank Islam) for private circulation only or for distribution under circumstances permitted by applicable laws. All information, opinions and estimates contained herein have been compiled or arrived at based on sources and assumptions believed to be reliable and in good faith at the time of issue of this document. This document is for information purposes only and has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. No representation or warranty, expressed or implied is made as to its adequacy, accuracy, completeness or correctness. All opinions and the content of this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of Bank Islam as a result of using different assumptions and criteria. No part of this document may be used, reproduced, distributed or published in any form or for any purpose without Bank Islam s prior written permission For Internal Circulation Page 5