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Malaysian exports continue to defy global slump

In yet another upside surprise, Malaysia’s exports grew by 1.7 per cent year-on-year in July compared to the consensus of a continued contraction by 2.5 per cent. Denominated in local currency (Malaysian ringgit, or MYR), growth has been flipping between low single-digit positives and negatives this year. Growth contracted by 3.4 per cent growth in June, revised from -3.1 per cent in the initial report.

Imports continued to be weak, though the 5.9 per cent YoY contraction was still a better outcome than consensus of -7.0 per cent and June’s -9.8 per cent. The import weakness is largely explained by the high base year effect rather than current weakness. However, this was enough to sustain the trade balance with a strong surplus.

While strong exports and the trade surplus should support Malaysia’s GDP growth in the rest of the year, it would be challenging for the economy to continue bucking the global slowdown amid an increasingly unfriendly external trade environment.

 

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