Non-oil domestic exports drop 2.8% in July

The non-oil domestic exports figure for July was announced this morning. This offers a glimpse of what lies ahead for the second half of the year and unfortunately, it probably has added more salt to wound. The headline export number reported a contraction of 2.8% YoY (-2.3% MoM sa) mainly due to drag from the electronics product sales. Overall electronics exports were down 16.9% as all key electronics products recorded weaker sales. Pharmaceutical export sales on the other hand expanded an encouraging 48.5% YoY but probably not enough to lift the mood in the market that has been plagued by global uncertainties over the last few weeks.

Going forward, while we expect external demand to gradually improve, uncertainties in the global economy has thrown a spanner into this assumption. The biggest risk is that the negative sentiment prevailing in the financial market right now could pose a threat to the real economy. Essentially, consumers may reel back on their expenditure while companies may put their expansion plans on the backburner. And this is where sentiment can have a "real" impact on the economy.