HLIB Research said Malaysia’s trade performance is expected to continue improving in the second half of the year.
PETALING JAYA: The country’s export growth is expected to strengthen further in the second half of this year (2H24), driven by the shipments of manufactured goods, including the electrical and electronics (E&E) segment.
In its report, CGS International (CGSI) Research said E&E growth would likely be accommodating for the rest of the year, following 2H23’s low base and strong growth in global semiconductor sales thus far.
“Despite the contraction in July’s S&P purchasing managers’ index manufacturing numbers, new export orders increased for the fourth consecutive month and at the fastest rate since April 2021,” CGSI Research said.
“We believe the improvement in the manufacturing sector for the past five months suggests a decent recovery in global demand. This is also backed by projections made by the World Trade Organisation where global merchandise trade is expected to expand by 2.6% year-on-year in 2024,” it added.
Malaysia’s exports accelerated to their fastest pace in nearly two years at 12.3% in July from 1.7% in June, exceeding market expectations of a 9% growth; while imports grew 25.4%, after a growth of 17.8% in the previous month, the Statistics Department revealed. With the increase in imports outpacing that of exports, the country posted a narrower trade surplus of RM6.4bil in July, as compared with RM14.3bil in June.
For the first seven months of 2024, total exports were up 5.1%, while total imports increased 15.5%. Total trade was up 9.8%.
Hong Leong Investment Bank (HLIB) Research said Malaysia’s trade performance is expected to continue improving in the second half of the year. This should be underpinned by a growth in external demand, potential front-loaded purchases ahead of the US presidential election in November and a low-base effect, it explained.
“Nevertheless, headwinds to global trade activity remain, stemming from geopolitical strains, continued disruptions around the Red Sea as well as the bumpy recovery of the global manufacturing sector,” it added.
HLIB Research maintained its 2024 gross domestic product growth at 5%.
TA Research said it remained optimistic about an improvement in trade performance for 2024, driven by increasing demand from international markets, the expected recovery of China’s economy and a positive outlook for the global semiconductor sector.
It noted Malaysia has seen a notable increase in the import of intermediate goods from December 2023 to July 2024. This trend suggests that exports may rise soon, as intermediate goods are crucial for manufacturing final products, it explained.
BIMB Securities Research projected an export growth of 6.2% for 2024.
Kenanga Research retained its 2024 export growth forecast at 7.3%, saying that it expects growth to pick up pace in 2H24, driven by a low base from last year and the anticipated technology upcycle.
“While we maintain an optimistic outlook on external trade, our forecast remains susceptible to downside risks,” it said, citing a slower-than-expected recovery in China’s economy and a potential US economic slowdown.
