Malaysia Jan exports likely to continue easing

MALAYSIAN exports are likely to show a further plunge in January amid the weakening global demand and the bearish outlook will continue in the first half of the year, economists say. A Business Times poll of 16 economists shows that an average decline of 23.61 per cent in January exports is expected. Imports are projected to decline an average of 28.86 per cent, with the trade balance averaging RM9.63 million.They said the outlook for the year was grim, with exports likely to contract 15.84 per cent and imports 14.97 per cent.The Ministry of International Trade and Industry is releasing the trade data today.

Irvin Seah, from DBS Bank, said the January figures will provide a glimpse of what lies ahead, adding that it "will not be a pretty picture".He foresees the headline export figure to register the sharpest decline since the dotcom bubble burst in 2001."While the Lunar New Year effect probably aggravated the decline, global demand weakness is still the underlying reason behind the horrendous export performance. Indeed, global demand is unlikely to pick up anytime soon and, with that, exports and overall growth will continue to languish," Seah said.US investment bank Citi believes that exports in January will show double the decline in December."

The deepening export contraction is expected to take its cue from persistently deteriorating export figures around the region as the destocking process continues," its vice-president for Asia-Pacific economics and market analysis Kit Wei Zheng said.Exports from China, South Korea, Singapore and Taiwan all plunged in January compared to December.

Malaysian exports are likely to follow suit, especially with commodity prices having eased from their robust levels last year, Kit said."Of particular importance is the 37.5 per cent plunge in Singapore's re-exports in January (December: -13.7 per cent) as almost a quarter of Malaysia's total trade is handled through Singapore.

"Other leading indicators, such as the US-based Institute for Supply Management's Purchasing Managers Index and those from the Organisation for Economic Cooperation and Development, continue to suggest that external demand will soften significantly in the first half, Kit added."Tech export orders likely continued to record double-digit contractions with global demand continuing to fall at an accelerating pace," he said.Softening employment conditions, which dampen private consumption spending, will further weigh on import growth, Kit said.TA Research economist Patricia Oh held the view that exports would be channelled mainly to Japan.Trade deficits widened in Japan in January as imports fell at a slower pace than the contractions in exports, she said.Japan is among Malaysia's major trading partners. Exports to Japan accounted for 10.8 per cent of the total, while imports from Japan comprised 12.5 per cent of overall imports last year.