Economic Update - External Trade

Below expectation – Malaysian exports for Jan’12 rose to RM 55.07 billion, slightly up 0.4% y-o-y but down 9.33% m-o-m, which is lower than our forecast of RM
60.33 billion (10% y-o-y). Meanwhile, imports climbed to RM 46.32 billion, up 3.28% y-o-y but down 11.65% m-om. This translates into RM 8.75 billion (-12.5% y-o-y,
5.3% m-o-m) of trade balance. Such result was unexpected and below our trade balance forecast of RM 11.45 billion.

We reckon the faltering global demand have weighed down exports growth. This was due to deteriorated exports volume to Republic People of China (RPC) and the
European Union (EU) by 12.2% y-o-y and 14.5% y-o-y respectively.

Exports expand at a lower pace – In January 2012, export grew only 0.4% y-o-y but down 9.33% m-o-m, which indicates an unhealthy sign of exports growth going
forward. Among commodities and goods exported to RPC and EU
that fell are: -

1) Crude petroleum.
2) Crude rubber.
3) Electrical and Electronic goods
4) Palm oil.
5) Manufactures of metal.

Imports growth exceeds export growth - Imports increased 3.28% y-o-y but dropped 11.65% m-o-m. We believe the increase in imports was due to higher capital
and consumptions goods with increment of RM 1.73 billion (30.8% y-o-y) and RM 581.1 million (19% y-o-y) respectively.

Trade balance is expected to decline in Feb with slowdown in exports – Due to the weakening global demand, we expect exports to slide 1.5-3.5% y-o-y while
imports continue to rise 5-6% y-o-y, which result into trade surplus of RM 8.45 billion.

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weak jan export data for MYR +1