KUALA LUMPUR: Malaysia's exports, which decelerated two consecutive months to 1.7 per cent year-on-year (YoY) in June, undershoot UOB Global Economics & Markets research's (UOB Research) and consensus' estimates of 5.0 per cent and 3.3 per cent respectively.
The month's export performance was weighed down by sluggish exports of manufactured and agriculture goods amid year-ago high base effects.
UOB maintained its 2024 full-year export growth forecast at 3.5 per cent, given that the global trade recovery remains on track amid a soft landing in the global economy, lingering logistic challenges and ongoing geopolitical risks.
"The latest S&P Manufacturing PMI survey for Malaysia indicated that new export orders rose for the third month running in June. Higher new orders were seen from customers in a range of Asia Pacific destinations, including Australia, the Philippines and Vietnam.
"The seventh month of double-digit improvement in Malaysia's imports of intermediate goods also points to further recovery in the export sector albeit bumpy in the near term," it noted.
Upside risks to its export outlook could derive from a more robust improvement in electrical and electronics (E&E) exports and commodity related products with higher price earnings in the coming months.
The firm said the latest E&E export level of RM53.2 billion in June was just a tad lower than its peak of RM54.2 billion recorded in September 2023 but had surpassed the average of RM51.9 billion seen from June until December 2022.
"At this juncture, exports of commodity products particularly mining goods remain subject to potential production shocks due to plant closures for maintenance with persistent fluctuation in global commodity prices."
UOB added that the government's bold and effective implementation of various national master plans including the Semiconductor Strategic Plan will be additional catalysts to the trade prospect in the short and medium term.
Malaysia recorded increased trade in June, with a 8.7 per cent YoY expansion to RM237.81 billion.
Trade surplus hit a nine-month high of RM14.3 billion in June (May: +RM10.0 billion), taking the cumulative trade surplus to RM32.0 billion in the second quarter of 2024 Q2 2024 and RM66.1 billion in the first half of 2024.
The trade surplus in Q2 2024 is expected to translate into a current account surplus of RM12.5 billion for the quarter.
"For the entire year of 2024, we project current account surplus to reach RM39.0 billion or 2.0 per cent of GDP, higher than the RM28.2 billion or 1.5 per cent of GDP recorded in 2023. This is in line with an expected recovery in the trade sector this year, " UOB said.