MIDF Amanah Investment Bank has maintained Malaysia’s exports and imports growth projection at 13.5% and 12.7% year-on-year (y-o-y), respectively.
The investment bank said Malaysia stood to benefit from the recovery in the global economy, especially with a projected strong recovery in the advanced economies such as the United States (US) and European area.
“Moreover, the continued growth in China’s economy will also lend support to Malaysia’s trade outlook,” it said in a research note today.
It said as a trading nation involved in the global supply chain, the strong demand for technology products and semiconductors would continue to drive the country’s electrical and electronics (E&E) exports.
“The ongoing pandemic, on the other hand, will be a cause of concern as external demand from affected countries could weaken,” it said.
Nevertheless, the investment bank said growing demand for medical devices amid the ongoing global fight to contain the Covid-19 pandemic would drive demand for rubber products.
For the resource-based exports, it said growing external demand, as well as the rising prices, would support the trade outlook for petroleum and palm oil-based products.
“Our immediate concern is the prolonged lockdown and the stubbornly high new Covid-19 infections which not only could affect Malaysia’s economic activities but could also affect trade performance."
“Certain trade-oriented factories and businesses were affected especially by the imposition of the Enhanced Movement Control Order (EMCO) in parts of Selangor in the first two weeks of July 2021,” it said.
However, the investment bank said it believed the lockdown would be a temporary drag before activities were allowed to resume in the latter part of the year as more people got vaccinated, increasing the chance to reach herd immunity this year.
“Looking at the first half of 2021 (1H 2021), trade performance has been stronger than expected, indicating a further improvement in exports and imports from 2H 2020,” it said.
According to the Ministry of International Trade and Industry (MITI), Malaysia’s trade performance continued the growth momentum in June 2021 with total trade increasing by 29.3% to RM188.7 billion compared to that of June 2020.
Exports recorded the 10th consecutive month of y-o-y expansion since September 2020, registering a strong growth of 27.2% to RM105.47 billion.
Source: The Edge Markets