Malaysia's trade surplus seen encouraging in near term
20 May 2022, 00:00 AM SGT
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KUALA LUMPUR (May 20): Malaysia’s trade surplus is expected to remain encouraging in the near term, driven by a full economic reopening across ASEAN and advanced economies, as well as a steady global economic outlook.
A sustained rally in global commodities, especially crude oil and crude palm oil, will also contribute to the positive trend, said Public Investment Bank Bhd, which is expecting the global economy to grow 4.4% this year.
Malaysia’s total trade continued to rise in April with a 21.3% growth year-on-year to RM231.44 billion, making it the 15th straight month of double-digit growth.
“A favourable trade mix pushed April’s surplus to jump by 15.7% year-on-year to RM23.5 billion, which could have been much higher if not for the steady rise in imports of 22%,’’ said the investment bank.
However, it reckons that the trade surplus momentum could be dampened by an expected turnaround in imports, following full economic reopening in ASEAN and massive government relief measures that may underpin a rebound in consumption and imports of capital goods.
Economic recovery in ASEAN and key economies is also projected to drive a steady export performance in the near term. “Exports will also be pushed by vaccine-induced recovery and expansionary global fiscal and monetary strategies, as well as key exports,” it said.
As for May exports, the research house noted that they would also be driven by a sustained rally in global commodities, especially crude oil, natural rubber, and crude palm oil.
Public Investment Bank said the export markets will also be aided by an expected improvement in agriculture and manufacturing output, due to measures to address the labour shortage issue.
“Supply disruptions are expected to be the only drag though this is expected to ease from the second half of 2022 onwards, consistent with a projected improvement in supply chain bottlenecks,” it said. “Downside risks remain no thanks to growth moderation in China, a concern given the country’s major role in our trade.’’
“The sharp rise in global commodity prices is also a worry, as that could hurt the global growth prospects, and therefore trade,’’ it added.