MIDF Amanah Investment Bank Bhd has revised Malaysia's export growth forecast upward to -3.5 percent year-on-year (YoY) from -8.3 percent projected earlier, in anticipation that the improving trend in July will continue for the remaining of the year in line with resumption of activities globally.
Malaysia’s exports in July 2020 increased 3.1 percent to RM92.53 billion from that of July 2019, the highest export value ever recorded for the month of July.
In its research note, MIDF said for the first seven months of the year, exports growth averaged at -4.6 percent Y-o-Y with the latest two months being positive.
The recovery seen were supported by sales of selected products particularly electrical and electronics (E&E) products, palm oil and rubber products.
“Demand for E&E products will likely continue to increase on a gradual manner buoyed by certain segments, such as medical devices and electronic devices that facilitate the new norm of working from home.
“Same expectations are seen for palm oil and palm oil-based agriculture products as exports will be supported by the suspension of palm oil export duty until December 2020, besides restocking activities.
“Demand for rubber products particularly medical gloves will probably remain elevated at least until the middle of next year,” it said.
MIDF said the reopening of global economies would increase demand, resulting in better trade flows.
The rebound in China’s economy added support to its expectation as the country is Malaysia's largest trading partner, hence, recovery in the republic's economy would mean demand for local products would continue to increase.
Nevertheless, multiple downside risks remain prevalent including new wave of COVID-19 and rising protectionism as it would hinder most of the countries’ efforts to restart their respective economies, it said.