Malaysia' Export Growth Expected Exceed 10 pct this year

August 05, 2008 19:33 PM

Malaysia's Export Growth Expected To Exceed 10 Pct This Year

KUALA LUMPUR, Aug 5 (Bernama) -- Malaysia export growth is expected to exceed 10 percent this year from 2.7 percent in 2007, according to Kenanga Research.

The projection was based on the strong first half of 2008 performance, Kenanga said in its "Malaysia External Trade" report.

However, the overall gross domestic product (GDP) growth for 2008 is projected to slow to 5.3 percent from 6.3 percent in 2007, underpinned by slower domestic spending and private consumption, it said."On the other hand, the large trade balance would help to increase the strength of Malaysia's resource balance and provide support for the ringgit," the research firm said.

Going forward, Kenanga said the weakening US and global economy may weigh on Malaysia's exports revenue.

Apart from the slowing external demand, the growth trajectory would be further underpinned by slower consumption and investment spending, it said."While GDP growth may reach or possibly breach six percent in second quarter of 2008, it may also signal the beginning of a cyclical downtrend going into the second half of 2008," Kenanga said.

"The continued slowdown in electronics and electrical (E&E) exports in June reaffirms our view that growth trajectory could have peaked," it said.

Similarly, the growth trend of non-E&E exports may have also follow suit as global prices of crude oil and palm oil begins to soften, it added.The second quarter 2008 export growth performance was the highest since third quarter 2004 at 20.8 percent.

"While GDP growth may reach or possibly exceed six percent in the second quarter of 2008, it signals the beginning of a downtrend going into the second half," Kenanga said.

"Thanks to the base effect as well as strong commodity-driven external demand, the second quarter 2008 trade performance was the highest since third quarter 2004 at 20.8 percent," it said.

As for Malaysia's trade performance in the month of June, receipts from mineral and agricultural commodity remained relatively high, Kenanga said."Malaysia's trade performance took a breather in June though surprisingly higher than what we had expected as receipts from mineral and agricultural commodity remains relatively high," it said."While the year-on-year growth in exports (18.4 percent) was above our estimate (14 percent), it was within consensus expectation," it added.-- BERNAMA