Exports from Malaysia are expected to outpace imports into the country by one percentage point over the rest of the year, according to Affin Hwang Capital.
Although Affin Hwang said that the country’s gross exports are expected to decline by 5% during this upcoming period, its gross imports have been forecast to contract at a rate of 6%. The investment banking group also pointed to the statistics which implied that the ongoing decrease in the value of products exported from Malaysia reached its lowest point during the second quarter of 2020.
However, the difference of one percentage point is lower than the degree by which exports outpaced imports in 2019. Last year, exports from Malaysia decreased by 0.8%, while imports into Malaysia decreased by 3.5%.
Affin Hwang also noted that the outlook for Malaysia’s exports was generally positive. One reason for this is because global sales of semiconductors increased by 5.8% year-on-year in May 2020 and 5.1% year-on-year in June 2020. Thus, Malaysia’s exports of electrical and electronics products are expected to further increase during the coming months.
Malaysia’s level of exports to China is also expected to increase because of the recent upturn in China’s economic performance. This turn of events has come on the back of stimulus measures as well as a fairly successful containment of the Covid-19 virus.
Affin Hwang also mentioned that exports not only to China, but also to all other countries were expected to increase due to increasing demand for Malaysian products from abroad.
“In the months ahead, (due to) the ongoing Recovery Movement Control Order (RMCO) which enabled almost all factory operations in the country to operate, we expect the country’s exports growth to trend in tandem with demand from overseas with minimal business disruption,” the company said.
The country’s manufacturing and agricultural industries supplied the majority of exported products from Malaysia in recent months. These exports were the primary reason why Malaysia’s exports registered a positive growth rate in both June (8% year-on-year growth) and July (3.1% year-on-year growth). The country’s trade surplus from January to July 2020 was RM89.7 billion; this figure represented an increase of RM700 million over the same period a year ago.
However, Affin Hwang also urged caution with regard to a potential future export increase primarily due to the risk of another more serious wave of the Covid-19 virus once again throwing economies around the world into disarray.
Such a situation would reduce economic growth around the world, disrupt international supply chain, and reduce the willingness of investors to invest. Affin Hwang went on to note that concerns over further escalation of the trade conflict between the US and China might also negatively impact the ability of the country to conduct adequate trade activities.
1st September 2020 17:33
This article brought to you by Legacy Times 传城时代