Malaysia to suffer MYR 5.2b trade surplus

Import sales are expected to hit a 9.5% rise as exports growth moderates to 3.6%.

According to DBS, trade and industrial production data (June) due this week will clearly reflect the external headwinds facing the economy presently. The trade figures are on tap first on Thursday and headline export growth should moderate to 3.6% YoY, down from 6.7% in the previous month. Import sales are expected to rise by 9.5%, which should thus deliver an overall trade surplus of MYR 5.2bn, up from the multi-year low of MYR 4.6bn recorded in the previous month.

Here's more from DBS:

Separately, sluggish external demand and generally slower growth momentum within the economy should imply a moderation in industrial production growth to 4.0% YoY, from 7.6% previously.

Indeed, while Malaysia's export and IP numbers have bucked the trend of declines in regional markets in May, we've highlighted previously that it was largely distortion from the base effect. We've continued to reiterate the point that the numbers have been sliding on the sequential basis. And June's set of figures will further reinforce the point, be it from the headline figure perspective or from the margin. It's turning from bad to worse on the external front.

PMIs of key export markets have been heading south persistently while indicators on the global electronics cycle are pointing to further easing in demand. As far as Malaysia is concerned, the outlook on the external front is more likely to deteriorate further with the Eurozone stuck in its economic turmoil and the recovery momentum in US increasingly turning more sluggish. Even Asia's demand, with China's recent growth being sub-par, is slowing. The message is clear. External headwinds are picking up. That implies weaker export and industrial performance in the months to come.