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Malaysia's exports at 11-year low in May due to COVID-19 – MIDF

30th June, 2020

KUALA LUMPUR: Malaysia’s exports dived 25.5 per cent year-on-year (yoy) in May 2020, to an 11-year low, the hardest fall since May 2009, and suggesting the prolonged impact of the COVID-19 pandemic on export-reliant economies, said MIDF Amanah Investment Bank Bhd.

In a research note Monday, it said the performance was in line with neighbouring countries like Indonesia and Thailand, which also experienced a contraction above 20 per cent yoy in their exports.

“Similar to exports, Malaysia’s imports contracted by 30.4 per cent yoy, the largest drop since January 2009. Nevertheless, as imports fell harder than exports, the trade balance shifted to a surplus of RM10.4 billion, in line with our expectations,” MIDF said.

However, it noted that exports would improve gradually in the coming months as key countries slowly reopen.

The research house said exports fell to all major countries except to China, continuing to record growth for the second straight month at 4.5 per cent yoy driven by petroleum products and palm oil, among others.

However, it said, outbound shipments to other key countries including the US, Japan, the European Union and the ASEAN region remained in negative territory.

“The impact of COVID-19 has emerged as the top risk to global trade flows as it affects both supply and demand of goods.

“This includes Malaysia particularly with almost two months of the movement control order (MCO) which has disrupted production and eventually exports,” it said.

China’s latest external trade performance showed some improvement, MIDF said, although the remaining key players’ performance at large remained questionable.

In addition, it said, the rising protectionism measures particularly the re-escalation of US-China tensions pose a bigger threat to foreign trade.

MIDF said, exports of all key products also saw a decline with outbound shipments of major sectors falling in May 2020, with the mining sector, which includes crude petroleum and liquefied natural gas (LNG), chalking the hardest drop (-49.1 per cent yoy).

Similarly, the research house said, the electrical and electronics (E&E) sector, which holds the biggest share of total exports, continued its negative streak for the 10th month but at a slightly slower pace than in April 2020, and will remain gloomy in the coming months not only due to COVID-19 but also the escalation of the US-China spat.

Meanwhile, palm oil and its products declined at a faster pace of -15.6 per cent yoy but are likely to improve in the coming months as India gradually reopens its economy, it added. –Bernama

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