Malaysia's exports failed to impress with 0.6% mini expansion

Import growth also fell.

Malaysia’s trade data for July has disappointed, with export growth registering a mere 0.6% YoY expansion, down from 7.9% previously and import growth falling by 0.7%, from 9.2% in June.

According to a research note from DBS, overall trade balance recorded MYR 3.64bn. Meanwhile, while the sharp drop in export sales can be partially attributed to the higher base in the same period last year, demand is also weakening.

Apart from the PMI in US, the PMIs of all key markets have all moderated in recent months. Global electronics cycle also appeared to have peaked.

Here’s more from DBS:

And with outlook on the Eurozone turning gloomier and recovery in the US still lacklustre, risk is on the downside on the external front. Even demand from China is cooling.

With the external headwinds, export growth is expected to remain in the single digit territory for the rest of the year.

This will thus implies a slower GDP growth momentum and higher chance that the central bank may hold off its next policy action.

Expectation is for another 25bps hike in the Overnight Policy Rate, following the last rate hike i July.

Risk is that Bank Negara may well postpone this move to a later date. Then again, much really depends on the risk about financial imbalances within the economy.

On that, there are glimpses of stabilization but still short of any significant improvement.