Malaysia: V-Shaped Recovery?

Annual exports rose for the first time in 12 months in October 2009, making Malaysia one of the first Asian countries to post positive year-on-year growth since the global financial crisis took grip last year.

According to a Reuters report released today, exports rose 1.6 percent from a year ago, possibly signaling the worst may be over for Asia’s third most trade-dependent country amid signs that the region, excluding Japan, may be staging a “V-Shaped” recovery, boosted by demand from China.

That was far better than the 10.5 per cent contraction forecast in a Reuters poll of 11 economists.

Malaysian exports to China surged by 39.2 per cent from a year earlier and electronics exports, which account for 43 per cent of Malaysia’s total, rose by 18.4 per cent.

“One should expect some sort of correction after that number but I don’t think the correction will be sufficient to change the positive trend,” said HSBC economist, Robert Prior-Wandesforde.

Indonesia, whose reliance on exports is much less than Malaysia, posted October annual export growth of 10.1 per cent.

In Asia, Singapore, Thailand and Hong Kong all posted contractions in exports in October although South Korea’s exports rose in November by 18.8 per cent year-on-year after 13 months of contraction.

Taiwan is expected to report on Monday that its exports for November rose 16 per cent over a year earlier, which would be the island’s first annual rise in 15 months. “Presumably, the rise in exports is more in line with a gradual improvement in the region rather than a dramatic surge.

Nevertheless, it is supportive and should offer some encouragement moving forward,” said Action Economics economist, David Cohen.

Are we out of the woods yet?