As compared to the 1997 South-east Asian currency crisis, this time Malaysia will find it hard to generate growth using the export model. While Malaysia’s exports are showing positive and encouraging signs amid a continued decline due to weak global demand, prediction has been made that this decline of exports will continue to be so in the next few months.On Sept 7, Bank Islam senior economist Azrul Azwar Ahmad Tajudin said the year-on-year decline in export for July was less severe than the bank had expected, but the decline in exports remained.
“We still see a sharp decline in export in the next few months,” he told Bernama when asked to comment on the trade figures.
He said Malaysia’s export is likely to see a tentative return to positive territory only towards end of the year.
Bank Islam projected a negative 25.8 per cent decline year-on-year for export in July.
On a year-on-year basis, exports in July decreased by 22.8 per cent to RM48.87 billion, but month-on-month it grew 8.4 per cent. It also was the highest export figure in the first seven months of this year, a statement from the Department of Statistics today said.
On a cumulative basis, exports in the first seven months period decreased by 23.3 per cent to RM299.4 billion, while imports were 24.7 per cent lower at RM232.3 billion.
This resulted in a cumulative trade surplus of RM67 billion for the January to July period, lower than RM81.9 billion registered for the corresponding period of 2008.
Another economist also said that the figures were better than expected.
“Overall, export performance came better than market expectations of -24 per cent (NST poll) and our house forecast of -22.3 per cent,” said Manokaran Mottain, Senior Economist, Economics Research of AmResearch Sdn Bhd.
Manokaran said in July, higher manufactured exports were attributed to stronger export receipts from electrical and electronic (E&E) products, machinery, appliances and parts, optical & scientific equipment, chemicals and chemical products as well as manufactures of metal.
Singapore, China, the US, Japan and Hong Kong were the top five export destinations, accounting for more than 51 per cent of Malaysia’s total exports.
Meanwhile, total imports rebounded by 14.2 per cent month-on-month, largely due to the higher imports of intermediate goods.
Manokaran said as have been expected earlier, regional exports including from Malaysia will be gaining momentum, as reflected by August data on purchasing managers’ index (PMIs), which had strengthened the view of Asia’s recovery in the manufacturing sector.
Global factory business activity expanded in August for the first time since May 2008 in a broad-based revival, witnessed especially in the United States and Japan, a recent survey by JP Morgan showed, he said.
China’s PMI also rose to 54.0 in August from 53.3 in July. The PMIs from elsewhere in this region were also encouraging.
“To some degree, we reckon the economies, which had seen some “stabilisation” earlier are beginning to establish stronger recovery signals head,” he said.
However, for Malaysia, the high-base factor attributed to record commodity prices a year ago, in particular oil prices, would continue to spring surprises this quarter, he said.
“We are expecting stronger improvement beginning October.”
Global semiconductor sales rose 5.3 per cent in July sequentially, reflecting a pick up in demand for products such as notebooks and cell phones, according to the Semiconductor Industry Association (SIA), he noted.
The fifth-consecutive monthly gain is one of the positive indicators that the industry is returning to normalcy levels, as manufacturers replenished inventories in anticipation of stronger sales in the second half-year.
As such, AmResearch believes any sequential increase will be moderately strong given the gradual recovery of demand, he added.
Do we dare to hope? Truly, hope we must!
