Economists upbeat on Malaysia’s trade growth momentum

KUALA LUMPUR, Feb 26 — The handsome growth momentum of Malaysia’s trade in January 2021 will likely continue for the remaining months of the year, riding on a consistent economic recovery following the global Covid-19 vaccination rollout, economists said.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the country registered a positive growth despite various lockdown measures instituted across the globe.

“In that sense, it was a decent performance and it goes to show that the external sector would continue to be the key pillar for Malaysia’s economic growth in 2021, he told Bernama.

He said the fixed income markets have also seen rising bond yields, suggesting that rates could be higher, and implying better days ahead.

“The vaccination programme will proceed smoothly and in a timely manner. If this happens, I suppose the economy reopening can be done in a convincing manner,” he said.

Earlier today, Department of Statistics Malaysia (DoSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin said Malaysia’s trade surplus soared by 38.0 per cent year-on-year (y-o-y) to RM16.6 billion in January 2021, while total trade widened by 4.1 per cent y-o-y to RM162.6 billion.

He said total exports continued its positive momentum of five consecutive months of improvement by expanding 6.6 per cent y-o-y to RM89.6 billion in January 2021, the highest export value recorded for January so far, driven by both domestic exports and re-exports.

Domestic exports grew by 6.3 per cent at RM72.1 billion and contributed 80.5 per cent to the total exports, he said in a statement, citing imports in January 2021 increased 1.3 per cent y-o-y to RM73 billion.

Sunway University Business School economist Prof Dr Yeah Kim Leng said the growth in export reflected the rising trend and road to a stronger export recovery in Malaysia, post pandemic.

“The positive number for January 2021 shows recovery and growing trade performance for the country.

“Nevertheless, we need to have a stronger consumer demand and narrower surplus rate for a more effective and economic sustainability,” he said.

At the same time, Yeah said the RM162.6 billion total trade achieved in January was highly attributed by global economy recovery prospects in tandem with vaccination programmes across the globe that have certainly strengthened Malaysia’s export outlook.

“Besides that, the growth was also in combination with the recovery of China’s economy and improved sentiment over the United States stimulus package,” he said.

Yeah expects the upward trajectory in exports performance to prolong, especially towards the second half of this year as most of the countries would have implemented the vaccination programme, and that consumer spending would be much stronger than before.

Meanwhile, RHB Research expects Malaysian exports to remain resilient with the global semiconductor upcycle still having more room to run.

“Demand for chips are increasing as a result of higher use in automotive and 5G technology although it is estimated to take at least several months for the supply chain to increase production capacity which means that exports growth is likely to still remain supported,” it said in a note today.

As for palm oil, the research house said the one-off increase in demand for palm oil seen in December 2020 has begun to come off following weaker January data.

It expects both price and volume to come off, leading to a more normal rate of growth for the commodity. — Bernama

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