KUALA LUMPUR: Malaysia's trade performance is expected to remain modest in the upcoming months due to a vulnerable outlook, although it benefits from a diversified export structure, said Hong Leong Investment Bank Bhd (HLIB).
Malaysia's exports contracted by 0.3 per cent year-on-year (YoY) in September, significantly below the consensus expectation of an 8.0 per cent expansion.
On the other hand, imports saw a decrease of 10.9 per cent YoY.
Monthly data showed that both exports and imports declined, with the drop in imports being more significant than that of exports.
This led to a wider trade surplus of RM13.2 billion, compared to the trade surplus of RM5.5 billion recorded in August.
"The World Trade Organisation (WTO) raised its projection for global goods trade growth to 2.7 per cent for 2024, previously at 2.6 per cent in its October update, but cautioned that increasing geopolitical tensions and uncertainty over economic policy pose substantial downside risks to its forecast.
"Given the vulnerable outlook, Malaysia's trade performance is also expected to remain modest in coming months," HLIB said.
The firm is kept its 2024 gross domestic product (GDP) forecast at 5.0 per cent YoY.
Meanwhile, CIMB Securities said given Malaysia's strong recovery prospects, it is keeping its forecasts for 2024 unchanged.
Exports are expected to increase 8.0 per cent compared to a decline of 8.0 per cent in 2023, while imports are projected to rise 18.0 per cent compared to a decrease of 6.4 per cent in 2023.
This aligns with CIMB Securities' GDP forecast of 5.2 per cent for 2024, compared to 3.6 per cent in 2023.
"However, risks remain, including uncertainties surrounding the US presidential election and rising geopolitical tensions, that may result in global trade disruptions and volatility in 2025.
"Nevertheless, global central banks commencing monetary easing will lend support to global trade activity," the firm added.