KUALA LUMPUR: Exports grew at a slower pace in July, coming below market expectations, due to the sharp contraction of electrical and electronic (E&E) products.
The International Trade and Industry Ministry said yesterday E&E products valued at RM20.61 billion, with a share of 33.7 per cent of total exports, declined by one per cent, or RM205.1 million, from July 2013.
Malaysia’s total exports in July expanded 0.6 per cent to RM61.12 billion from a year earlier, the weakest since June 2013, while imports decreased by 0.7 per cent to RM57.48 billion, the first decline since May last year.
A Business Times poll had forecast an average 6.37 per cent rise in exports and a 5.22 per cent gain in imports.
The trade surplus for the month was RM3.64 billion, compared to RM3.97 billion in June, largely in line with the RM3.68 billion forecast of 13 economists.
AmResearch equity market economist Patricia Oh said the slow growth in July was due to weak external demand, especially overseas shipments of electrical and electronic products, which fell for the first time since June last year.
The decline was mostly evident in shipments to China, Japan, Thailand and Indonesia.
“Owing to slower demand in China, Malaysia’s exports to China had posted a decline for the third consecutive month to register -14.4 per cent year-on-year.”
Exports to Japan contracted by 22.1 per cent as a result of weaker exports of liquefied natural gas and crude petroleum.
Oh said exports to the United States and European Union, however, improved in July.
“Going forward, Malaysia’s trade segments are expected to be weaker in the second half of the year compared to the first half, on the back of the slowdown in global demand.”
Bank of America Merrill Lynch economist Dr Chua Hak Bin said apart from E&E, shipments also contracted for metal manufactures and machinery and appliances.
Imports also shrank due to contractions in capital and consumption goods.
Chua described the Asian export recovery as elusive, even on a modest US and global growth upturn.
“Looking at a three-month moving average basis, export growth has recently eased not only in Malaysia, but in South Korea, Singapore and Taiwan as well. “
Yesterday’s trade details raised the probability of a pause in Bank Negara Malaysia’s interest rate hike at its meeting on September 18.
Central bank chief Tan Sri Dr
Zeti Akhtar Aziz said on Thursday there will be cause for some pause
if growth is slowing “very significantly”.