Malaysia Exports Post First Drop in 15 Months on Global Slump

By Stephanie Phang and Michael Munoz

Dec. 4 (Bloomberg) -- Malaysia's exports unexpectedly posted the first decline in 15 months in October as electronics and palm oil sales fell amid a global recession.

Overseas sales dropped 2.6 percent from a year earlier to 53.5 billion ringgit ($14.7 billion) after gaining a revised 15 percent in September, the trade ministry said in a statement in Kuala Lumpur today. The median estimate in a Bloomberg News survey of 13 economists had been for a 6.6 percent gain.

Malaysia will feel the impact of a ``deterioration in the external environment'' this quarter and needs to shore up domestic demand to ensure growth next year, the central bank said last week. The $181 billion economy expanded at the slowest pace in three years last quarter, prompting Bank Negara Malaysia to cut interest rates for the first time since 2003 on Nov. 24.

``The global downturn in demand pulled down Malaysian exports in October, as they have for economies across the region, along with the drag from lower commodity prices,'' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore.

Malaysia's government announced a 7 billion-ringgit spending plan to bolster its economy on Nov. 4, joining countries from Germany to South Korea in trying to limit the impact of a deepening global economic slump that's already pushed neighboring Singapore into recession.

Sales by American-owned electronics makers in Malaysia will fall this year and next as recessions in the U.S., Japan and Europe sap demand for Dell Inc. computers and other devices, an industry group said last week. Dell, Intel Corp., Motorola Inc. and other U.S. electronics makers account for about 12 percent of Malaysia's total exports.
U.S. Exports

Malaysia's exports to the U.S. dropped 19 percent to 6.44 billion ringgit in October from a year earlier because of a decline in electrical and electronics shipments, the ministry said today. The U.S. has fallen behind Singapore in the first 10 months of the year as Malaysia's largest overseas market.

Exports of electrical and electronics goods, which made up 37 percent of total exports in October, plunged 13 percent from a year earlier. Unisem Bhd., the country's second-largest publicly traded semiconductor assembler, posted a second quarter of profit decline in the three months to September.

Palm oil sales fell 4.6 percent in October as prices eased after reaching records earlier this year. Malaysia is Southeast Asia's second-largest oil and gas producer and the world's No. 2 palm oil seller.

Imports dropped 5.3 percent in October to 43.8 billion ringgit, leaving a trade surplus of 9.62 billion ringgit, the smallest since March. Exports grew 14 percent in the first 10 months, while imports expanded 7.4 percent, leaving a trade surplus of 118.8 billion ringgit.

To contact the reporter on this story: Stephanie Phang Singapore at sphang@bloomberg.net; Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net
Last Updated: December 3, 2008 23:03 EST