Comment Malaysia's 1Q14 export growth exceeds BNM and MOF target

by **Cals** Wed 07 May 2014, 22:49

Comment Malaysia's 1Q14 export growth exceeds BNM and MOF target

Business & Markets 2014

Written by Rosnani Rasul, head of M&A Securities Research

Wednesday, 07 May 2014 16:30

Malaysia’s month of March export decelerated to 8.4% y-o-y (January: 12.2%; February 12.2%) but grew by 8.3% m-o-m, lifting 1Q14 average to 10.9%, significantly higher than Ministry of Finance (MOF) and Bank Negara Malaysia (BNM) full year target of 1.6% and 5.8% (gross export) respectively.

This is no small feat and a good start for Malaysia and we are hoping that the momentum will sustain for the next 3 quarters.

Looking at the solid 1Q14 numbers, the country may be able to record GDP growth of more than 5.0% in 1Q14 (4Q13: 5.1%; 1Q13: 4.10% ), a good omen to reach BNM target of 5.0%-5.5% for the year.

This is in stark contrast to 1Q13 export contraction of 2.7% where Malaysia recorded quarterly GDP of 4.1%. Note than 1Q14 GDP will be released on the 16th of May 2014 (Friday) and consensus is expecting 1Q14 GDP of 4.7%.

Import, in the meantime, slowed down considerably or growing by a paltry 0.5% y-o-y in March (January: 7.2%; February: 9.5%), pushing 1Q14 average to 5.7% against 1Q13 average of 6.0%.

Trade surplus touched RM9.5 billion for the month, growing 96.8% y-o-y but tanked 8.7% m-o-m, lifting 1Q14 trade surplus to a healthy RM26.2 billion against RM14.1 billion in the same quarter last year or a jump of 85.8% y-o-y.

Malaysia’s steady export growth was anchored by 1) cheaper Ringgit and 2) pockets of recovery in key parts of the world most notably the Eurozone which is predicted to record first output growth of 1.0% in 2014 (2013: -0.4%).

Ringgit averaged at RM3.30 per Dollar in 1Q14 against RM3.21 in 4Q13 and RM3.08 in 1Q13 respectively. We predict Ringgit to average at RM3.25-RM3.30 per Dollar in 2014 compared to 2013 average of RM3.17 per Dollar.