PETALING JAYA: As Malaysia’s exports contracted for the second consecutive month in November, this has raised concerns about the country’s exports outlook moving into 2023.
Over the past months, exports have played a crucial role in supporting the Malaysian economy, especially at a time when domestic demand remained soft at the height of the Covid-19 pandemic.
However, with the continued contraction of exports on a month-on-month (m-o-m) basis, there are expectations that such a trend would weigh down the country’s growth momentum ahead.
In November 2022, Malaysia’s exports dipped by 1% m-o-m to RM130.24bil as compared to RM131.59bil in October 2022. This followed a contraction of 8.8% m-o-m earlier in October.
Economist Aimi Zulhazmi Abdul Rashid told StarBiz the 1% m-o-m contraction in November can be read as one of the early signals for the global economic slowdown next year.
The associate professor at Universiti Kuala Lumpur’s Business School projected a slower growth for Malaysia’s trade figures in 2023, although he pointed out that the figures will still be on “positive notes”.
“The International Monetary Fund and the World Bank are already projecting a slower global economy next year, hence the developed economies in the West will move into recession.
“The silver lining is that the Asian region will still be putting up positive numbers in 2023, albeit at a slower rate than 2022.
“The reopening of China’s economy after the lockdowns will help the region including Malaysia to have a bit of a buffer for positive trade numbers, considering that China has been Malaysia’s biggest trade partner for the last 12 years,” he said.
Aimi Zulhazmi added that the government must be prepared to stimulate the domestic economy as the engine of growth for the country’s gross domestic product in 2023.
Meanwhile, Malaysia University of Science and Technology economics professor Geoffrey Williams said that Malaysia’s export growth has been slowing on a monthly basis since August.
The export momentum appears to be normalising after the recovery from the low base during the movement control order, according to him.
“Part of the performance is due to re-exports of products not produced in Malaysia and growth in exports of Malaysian products has been slowing for the last three months.
“We cannot read too much into one month of data but the past few months does suggest slowing growth and a return to more normal activities,” he said.
In a statement yesterday, the International Trade and Industry Ministry (Miti) reported that Malaysia’s trade and imports also contracted month-on-month in November by 2.8% and 4.9%, respectively.
Trade surplus, however, rose by 23.5% compared to October 2022. On a year-on-year (y-o-y) basis, Miti said exports rose by 15.6% to RM130.24bil, while imports and trade surplus increased by 15.6% each to RM107.93bil and RM22.3bil respectively.
Total trade for the month of November 2022 expanded by 15.6% to RM238.17bil, marking the 22nd consecutive month of year-on-year double-digit expansion.
“The export expansion was underpinned by strong exports of electrical and electronic (E&E) products, liquefied natural gas (LNG), petroleum products as well as crude petroleum,” the ministry said.
In November 2022, exports of manufactured goods – accounting for 84.6% of total exports – improved by 15% y-o-y to RM110.23bil and was the 16th straight month of double-digit expansion.
The growth was underpinned by E&E products and petroleum products, which respectively posted more than RM1bil increase in exports.
Exports of mining goods (8% share) soared by 62.6% y-o-y to RM10.43bil, the 20th successive month of double-digit growth led by higher exports of LNG and crude petroleum.
Exports of agriculture goods (6.8% share) declined by 11.1% to RM8.87bil compared to November 2021 due to lower exports of palm oil and palm oil-based agriculture products.
In a separate statement, chief statistician Datuk Seri Mohd Uzir Mahidin said Malaysia’s exports in November 2022 was supported by increases in domestic exports and re-exports.
Domestic exports totalled RM104.1bil, accounting for 79.9% of total exports and increased by 10.5% y-o-y.
On the other hand, re-exports registered at RM26.2bil or 20.1% of total exports. Re-exports increased by 41.8% in November 2022.
“In conjunction with the annual growth, 145 out of 256 commodity groups in exports showed increases as compared to the same month of the previous year and led by electrical & electronic products.
“As for imports, 167 of 257 commodity groups posted positive growths,” stated Mohd Uzir.
It is noteworthy that exports to major trading partners notably Asean, the United States, the European Union and Japan recorded double-digit growth.
In November 2022, trade with Asean contributed 26.6% to Malaysia’s total trade, rising by 11.6% y-o-y to RM63.46bil.
For the period of January to November 2022, trade expanded by 29.9% to RM2.61 trillion compared to the same period last year.
Exports increased by 27.2% to RM1.42 trillion.
Imports rose by 33.3% in the 11-month period to RM1.19 trillion and trade surplus edged up by 2.6% to RM227.89bil.
“Trade, exports, imports and trade surplus registered the highest value for the period,” Miti said.
Looking ahead, Williams said the country’s exports performance in 2023 will depend on the demand from Malaysia’s main markets which are in Asean and Asia, including China.
“In Asean markets, demand is likely to remain strong but in China, there will be a general overhang from slower growth due to continuing Covid-19 policies and the financial market conditions.
“Unless there is a major worsening of conditions in other major markets in the United States and Europe, the drag on exports will not be too severe and will contribute to growth.
“But the higher risks mean that exports cannot be relied on to push growth. So the domestic economy will still be important in maintaining growth next year,” he said.
