Non-oil domestic exports 'sluggish' at 4.5% increase in June

External demand weakness arising from a waning global economic outlook continues to cast a shadow on export sales. PMI indexes of key markets such as China, US, Eurozone have all moderated in the month. And while global electronics cycle appears to have bottomed, key indicator such as the SEMI book-to-bill ratio has continued to languish at below parity level, signaling a sense of cautiousness by semiconductor manufacturers in anticipation of weak demand ahead.

Nonetheless, a possible ramp up in pharmaceutical production and sales is expected after two consecutive months of down cycle in this industry due to plant shutdowns. Indeed, this has been mostly factored in when manufacturing growth for the quarter expected to decline by a less than expected 5.5% despite an average contraction of 13.5% in industrial output in Apr-May.

That said, much will really depend on how the economic situation pans out in the coming months although recent data from Japan, Eurozone, US and Asia are suggesting that the current deceleration may be temporary. But chance is high that export performance will weaken further in June before it gets better in the coming months.