Bank Muamalat's Mohd Afzanizam said the strong US economy has translated into higher demand that benefits Malaysian exports.
PETALING JAYA: Malaysia’s exports to China shrank again in November by a bigger rate, while the outbound shipments to the United States soared to a record high, making it Malaysia’s largest export market.
Electrical and electronic (E&E) products, notably semiconductor devices and integrated circuits, played a key role in the divergent export performance.
The United States bought more E&E products from Malaysian manufacturers, while China cut its purchases amid its battle against soft domestic economic conditions.
The increase in exports to the United States was so substantial that it managed to offset the drop in exports to Singapore, China, Hong Kong and Japan, which are Malaysia’s second to fifth-largest export destinations in descending order.
In November 2024, the exports to the United States surged by 57.3% or RM7.4bil year-on-year (y-o-y) to RM20.3bil.
Meanwhile, the exports to Singapore, China, Hong Kong and Japan fell by RM2.88bil cumulatively.
In particular, exports to China contracted by 11.9% y-o-y to RM15.17bil in November. Nonetheless, Malaysia remains in a trade deficit position with China.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the strong US economy, which is a standout among the Group of Seven or G7 economies, has translated into higher demand that benefits Malaysian exports.
Meanwhile, China is struggling to sustain its 5% growth target and the government has been prescribing stimulus measures.
In the case of Malaysia’s outbound shipments to China and the United States, Mohd Afzanizam said the divergent export trend could continue.
“But China could pick up its pace next year, perhaps due to the intervention via fiscal and monetary stimulus,” he told StarBiz.
The Statistics Department reported yesterday that Malaysia’s overall exports increased by 4.1% y-o-y in November 2024 to RM126.6bil.
At 4.1%, Malaysia’s exports recorded faster growth than imports for the first time since December 2021.
The strong exports in November 2024 were supported by robust growth in key sectors, notably manufactured and agriculture goods, particularly E&E products, palm oil and palm oil-based agriculture products as well as machinery, equipment and parts.
As for imports, an increase of 1.6% y-o-y to RM111.3bil was seen in November.
The trade balance continuously posted a surplus with RM15.3bil, up 26.3% y-o-y. At RM15.3bil, this was the highest value recorded in 14 months.
It is, however, noteworthy that trade with Free Trade Agreement (FTA) partners in November, which accounted for 63.9% of total trade, decreased by 2.4% y-o-y to RM152.1bil.
Exports to FTA partners shrank 4.6% to RM81.38bil while imports edged up by 0.2% to RM70.72bil.
Trade with Asean in November 2024, which represented 25.3% of the country’s total trade, decreased by 5% y-o-y to RM60.14bil.
Exports dipped by 6.3% to RM34.1bil as a result of weaker demand for petroleum products and crude petroleum as well as optical and scientific equipment.
Breaking down by types of goods, the exports of manufactured goods increased by 5.2% y-o-y to RM107.65bil in November 2024. Manufactured goods represent 85.1% of Malaysia’s total exports.
The increase in manufactured goods exports was contributed by higher shipments of E&E products, machinery, equipment and parts, rubber products as well as chemicals and chemical products.
Exports of agricultural goods posted the eighth consecutive month of y-o-y expansion, registering a double-digit growth of 13.4% to RM9.52bil.
This was on account of solid exports of palm oil and palm oil-based agriculture products due to increased export volumes and prices.
Meanwhile, exports of mining goods slipped by 17.3% y-o-y to RM8.3bil following lower exports of crude petroleum due to decreased export volumes and prices.
However, exports of liquefied natural gas grew on higher export volumes.
For the period of January to November 2024, Malaysia’s exports, imports and total trade remained positive with a growth of 4.7% to RM1.37 trillion, 13.3% to RM1.25 trillion and 8.7% to RM2.62 trillion, respectively.
However, the country’s trade surplus experienced a contraction of 42% to RM117.94bil as compared to the same period of the previous year.
Based on the positive trade performance in the first 11 months, the Investment, Trade and Industry Ministry (Miti) said the country is on track to meet the official growth forecasts for trade, exports and imports in 2024, which are set at 9.4%, 5.6% and 13.8%, respectively.
“While there have been positive developments in the nation’s export performance, Miti and the Malaysia External Trade Development Corp are committed to further boosting export growth by proactively intensifying promotional efforts and exploring new markets for the success of Malaysian exports,” said Miti in a statement.
While the government foresees a 5.6% exports growth this year, Mohd Afzanizam has a lower expectation of about 5.1%.
For next year, the economist said exports growth could moderate to around 4.6% as global demand looks increasingly challenging.
