KUALA LUMPUR: Malaysia's trade performance is projected to keep improving in the second half of the year (2H24), supported by rising external demand, potential early purchases ahead of the US presidential election, and a favourable low base effect.
However, Hong Leong Investment Bank Bhd (HLIB Research) cautioned that global trade activity faces ongoing challenges, including geopolitical tensions, disruptions around the Red Sea, and an uneven recovery in the global manufacturing sector.
"Nevertheless, taking all into consideration, we maintain our 2024 gross domestic product (GDP) forecast at 5.0 per cent year-on-year (YoY)," it added.
Malaysia's trade continued to be strong in July 2024, increasing by 18.3 per cent year-on-year, the fastest growth rate in 21 months.
The Ministry of Investment, Trade, and Industry (MITI) reported that the total trade value reached RM255.88 billion, the highest since October 2022.
Meanwhile, exports also accelerated to their fastest pace in nearly two years at +12.3 per cent YoY in July, compared to June at 1.7 per cent YoY, surpassing consensus expectations of +9.0 per cent YoY.
Similarly, imports also gained momentum during the month to +25.4 per cent YoY.
Exports to most major markets increased, with notable growth in exports to the US (+30.9 per cent YoY), ASEAN (+16.0 per cent YoY), the EU (+14.2 per cent YoY), and Japan (+11.6 per cent YoY), driven by higher demand for electronics, machinery, metal products, and palm oil.
However, HLIB Research noted that exports to China fell at a faster rate (-11.4 per cent YoY).
Manufactured product exports rose to +10.3 per cent YoY, contributing +8.3 percentage points to overall export growth.
"This increase was mainly due to higher exports of machinery and equipment and electronics, alongside strong global semiconductor sales in recent months.
"Chemical product exports also grew, and metal product exports rebounded, though growth in optical and scientific equipment exports moderated," it added.
Meanwhile, the commodity-related exports grew by +20.8 per cent YoY, contributing +4.1 percentage points to overall growth.
This increase was led by higher exports of palm oil and rubber products, along with a rebound in petroleum products.
Meanwhile, liquefying natural gas (LNG) exports moderated, and crude petroleum exports declined due to weaker volumes and average unit values.