August Export Growth Mostly Driven By Demand For E&E, O&G, palm oil

The robust growth in Aug-22 also suggests correction in commodity prices and concerns about sluggish recovery in China have yet to affect Malaysia’s trade performance.

August Export Growth Mostly Driven By Demand For E&E, O&G, palm oil
Photo by Paul Teysen / Unsplash

Robust external trade in Aug-22 for Malaysia and this was mostly driven by external demand for E&E, O&G, palm oil products.

External trade maintained another month of robust expansion in Aug-22. Malaysia’s total trade grew strongly by +56.5%yoy to RM265.7b.

Exports growth picked up to +47.9%yoy, the strongest increase in 16 months. It was also because of the lower base in Aug-21.

Exports growth in Aug- 22 was mostly driven by sustained foreign demand for E&E, oil & gas and palm oil products, says MIDF.

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Leading Index

Meanwhile, Malaysia’s leading index (LI) continued to expand by +4.1%yoy in Jul-22, mainly driven by increased real imports of other basic precious and non-ferrous metals.

On month-on-month basis, LI dropped significantly by -2.0%mom (Jun-22: +0.4%mom), the largest monthly decline since Jun-21.

GDP

"We maintain our 2022 GDP growth forecast at +6.6%, strengthening from the weak growth last year which was affected by the nationwide lockdown. Recent indicators continued to show improvement, with the continued expansion in LI signals positive growth momentum to continue in the next few months," says MIDF.

Better Trade Performance

External trade maintained another month of robust expansion in Aug-22. Malaysia’s total trade grew strongly by +56.5%yoy to RM265.7b, as both exports and imports increased from previous month.

Exports growth picked up to +47.9%yoy, the strongest increase in 16 months and higher than our and market expectations which was also because of the lower base in Aug-21.

The robust growth in Aug-22 also suggests correction in commodity prices and concerns about sluggish recovery in China have yet to affect Malaysia’s trade performance.

In fact, close to 81% of the exports growth in Aug-22 was attributable to sustained foreign demand for E&E, oil & gas and palm oil products.

"We noticed the lower base in Aug-21 resulted in +111.2%yoy surge in re-exports, while domestic exports rose by +34.6%yoy which was the fastest expansion since Nov-21.

"Meanwhile, imports growth even jumped to +67.7%yoy, the fastest monthly growth on record and maintaining double-digit pace from Feb-21, driven by increased demand in the post-Covid recovery as Malaysia transitioned into endemic phase this year," analysts say.