Commodity exports stay buoyant

KUALA LUMPUR: Commodity exports continued to be strong, driving growth in external demand in April.


Exports grew within market expectations by 11.1 per cent to RM57.80 billion while imports grew by 9.4 per cent to RM46.79 billion.

The International Trade and Industry Ministry (Miti) said yesterday total trade in April expanded by 10.3 per cent to RM104.58 billion, with total surplus valued at RM11.01 billion.

Miti attributed the increase to higher exports of liquefied natural gas (LNG), palm oil, refined petroleum products, crude rubber, optical and scientific equipment as well as chemicals and chemical products.

Wu Kun Lung of Credit Suisse described the performance of exports so far this year as better than the historical average, despite a downward revision to March's export number from 7.8 per cent to 4.1 per cent.

Exports of oil, liquefied natural gas and palm oil were up 40 per cent in April compared to a year ago, he noted, adding that in ringgit terms, they were almost back to the peak in July 2008.

Exports of electrical and electronics (E&E) fell in April. Wu described this weakness to be in line with what happened to the rest of the region.

The slowdown was mainly due global growth momentum easing and supply chain disruptions caused by Japan's earthquake.

"The recent slowdown in global growth momentum and the fall in commodity prices suggest that exports should remain sluggish in the next few months.

"But we expect this weakness to be transitory and expect global growth momentum to pick up later in the year," he added.

OCBC Bank economist Gundy Cahyadi said low basis effects could partly help to prop up annual export growth for Malaysia, although he expects to see some signs of the global economy in a soft path in the second quarter of the year.

"In general, while we are delighted with the first quarter performance and encouraged by the rebound in manufacturing export in the period, we don't expect to see broad-based strength in exports to sustain for the rest of the year."

Meanwhile, Miti listed Singapore, China, Japan, the US, and Thailand as the top five export destinations accounting for 50.4 per cent of the total exports in April.

Exports to China rose by 7.2 per cent due to higher exports of crude rubber, palm oil and E&E products

It said exports to Japan surged by 35.1 per cent in April, contributed mainly to higher exports of LNG.

Exports to the European Union (EU) registered an increase of 4.6 per cent on higher exports of crude rubber as well as optical and scientific equipment while exports to the US declined by 5.8 per cent due mainly to lower exports of E&E products.

Imports in April expanded by 9.4 per cent due mostly to intermediate goods which totalled RM32.06 billion or 68.5 per cent of total imports.

Kit Wei Zheng of Citi said imports from Japan continued to decline, likely due to supply disruption post-earthquake.

He said although such factors lead to slower exports in the second quarter, any slowdown will likely be temporary.

Exports are expected to remain supported by higher commodity exports to Japan which have likely already picked up for reconstruction purposes even as disrupted Japanese production could be diverted to manufacturing facilities in Malaysia.