Alliance: Fall in May exports bigger than expected

Alliance: Fall in May exports bigger than expected
Business & Markets 2013
Written by Ho Wah Foon of theedgemalaysia.com
Friday, 05 July 2013 17:15

KUALA LUMPUR (July 5): The decline in Malaysia’s May exports of 5.8% year-on-year was deeper than street expectations of 3%, said Alliance Research.

Bernama had earlier reported that the decline in May exports was due to lower exports to ASEAN, India and Japan, especially palm oil, crude petroleum, electronics and electrical products (E&E).

“While the decline in May exports is not unexpected, as the Bloomberg median forecast had earlier pointed to a decline of 3% y-o-y, the quantum of contraction has surpassed expectations,” said Allinace Research in a note this afternoon.

It said the latest May exports data indicates continued near weakness on the external front.

But it said: “On the flip-side, we do not see this to last longer, which was supported by a sustained 3-month moving average increase of 4.6% in gross imports in May versus 3.9% increase in April.

“The gain in the overall imports, which is proxy for future exports, comes in support of an expected recovery in the second half of the year.”

Alliance Research said in the short-term, the downtrend is in line with the easing economic performance in the major economies like China and EU.

The slowdown was also exacerbated by weaknesses in the global demand for CPO and rubber, it added.

“With exports weakness continues to drag on till sometime in 3Q13, we maintain our full-year exports growth estimate of between 3% and 4% for this year (+0.6% in 2012).

“We maintain our view that the economic outlook may remain weak in the first half-year. Therefore, we maintain our 2Q growth forecast at 4.7%, rebounding from +4.1% in 1Q13.”