Malaysia's export growth predicted to slow to 8.4%

Blame it on seasonal effect.

According to DBS, export growth in Malaysia in January should still remain fairly healthy. A forecast of 8.4% YoY has been penciled into its forecast.

Here's more:

While this can be labelled as a significant dip from the surge of 14.4% in the previous month, it is mainly on account of seasonal factor rather than a fundamental slide in demand.

Plainly, the Chinese New Year effect is at work. Plants across China will typically shut down for up to two weeks during the festive season period. This obviously will prompt purchasing managers to cut down on their purchases of materials and components.

Given that China is one of the key markets for Malaysia exporters, a cutback in orders will naturally have a spill-over effect on the export performance.

Separately, import growth is expected to contract by 1.5% YoY. A weaker currency is probably having an effect on domestic consumers’ buying behaviour given its impact of higher import prices. Overall, this should bring trade balance to a surplus of MYR 8.9bn, slightly lower than MYR 9.5bn recorded in the previous month.