Trade In March 2010

Charting a month-to-month stronger economy
By JAGDEV SINGH SIDHU
jagdev@thestar.com.my
Saturday May 8, 2010

ECONOMIC projections in Malaysia these days are being outdated faster than clothes in the fashion industry.

And the reason for that is something everyone would welcome.

Stronger economic growth, seemingly from month to month, has seen economic growth estimations for 2010 tweaked upwards gradually from a low of between 2% and 3% when the economic report was released last October to between 4.5% and 5.5% when Bank Negara released its annual report in March.

Even that most recent healthy estimate is in danger of going out of fashion as recent data has suggested that economic growth for 2010 would be much stronger. The reason for the constant revision in estimates is down to how the economy is progressing.

From the depths of the recession in 2009, the world economy is on an upward swing thanks largely through a combination of easy money and humongous fiscal stimulus seen in many economies throughout the world.

The latest kicker to how strong the economy will be in 2010 came from the country’s external trade data.

Exports in March grew by 36.4% year-on-year with the country’s large electronics and electrical industry showing an export growth of about 32%, chemicals by 61%, palm oil by 50%, transport equipment by 188% and crude oil by 56%.

Maybank Investment Bank said the latest external trade figures were just 6.1% off the peak reached back in July 2008. The price of crude oil was at its all time high during that month in 2008.

“In the light of continuing good global demand for consumer electronics, we should see a sustained positive growth for the E&E sector,” said CIMB Research in a note.
While exports were strong, imports grew at a faster rate at 45.3% in March.
“Imports of intermediate goods, mainly inputs for the manufacturing sector, increased by 49.4% year-on-year and 30.7% month-on-month which bode well for export figures in the coming months,” said Maybank.

“Both imports of consumption goods (+18.7% year-on-year; +28.2% month-on-month) and capital goods (+16.1% year-on-year; +17.0% month-on-month) also grew strongly, signalling robust consumer and business spending.”

CIMB Research said the favourable external trade performance bodes well for growth.
“Exports and imports have shown steady strong gains in the first quarter of 2010, not only due to the recovery of global trade flows but also aided by a low base comparison,” it said.

The strong export growth, along with industrial production in the first two months of the year and loans growth data from banks, have given rise to suggestions that the economy is on the path of a strong rebound.

“The robust export growth momentum bodes well for economic growth in the first quarter,” said CIMB Research. Given the stronger than expected export performance in the first quarter, CIMB research has revised its export growth estimate to 17.5% from 10% previously.

The wait is now on for the release of the industrial production data for March, would then give economists a clearer picture in calling what growth in the first quarter will be.

But the existing data is sufficient for many to start putting in their early calls that suggest growth in the first quarter could be much better than predicted.
CIMB Research said, pending the release of the industrial production data next week, first quarter growth would come in at 7%.

AmResearch, which has also been positive following the release of the export data, has forecast growth in the first quarter to come in at 9.8%.

“Given the recent developments in both domestic and external conditions, we are confident our 2010 forecast of 8% should be achievable,” it says.

Foreign economists are, however, more gung-ho about Malaysia’s economic prospects. HSBC’s Robert Prior-Wandesforde, in his report on April 26, is expecting the first quarter to post growth of 10.2% and a full-year of 7.3%. “This optimism reflects a number of factors,” he said in the report.

Prior-Wandesforde says there was plenty of evidence to suggest that the economic recoveries of South East Asian neighbours have become “self-sustaining.”

His leading indicators point to further sizeable export gains and consumers confidence in Malaysia bodes well for a strong rise in consumption growth.

DBS Group economist Irvin Seah in a report on April 30 predicts that Malaysia’s first quarter would post growth of 11.1%, fuelled by strong export demand from Asia as well as the current cyclical upswing in electronics.

“On top of an export sector running at full throttle, domestic consumption and investment will provide additional support,” he says in his report.

RAM Holdings group chief economist Dr Yeah Kim Leng, who has forecast first quarter growth at 9%, says that although net exports in the calculation of GDP will show a negative contribution as import growth is stronger than export growth, he said the strong external trade performance would nonetheless have deep linkages to domestic spending.

He says a strong economy would generally show a negative impact on net export growth and strong imports would not negatively impact on GDP as that would be offset by stronger domestic demand.
“It’s through this that private consumption and investments will drive growth,” he says.
The first quarter GDP would also appear strong thanks to the low-based effect as the first quarter of 2009 saw the economy contract by 6.2%.
“The low-base effect will constitute at least half of the growth,” said Yeah.
CIMB research believes that the rate of economic growth would taper off towards the second half of the year as the low base effect disappears. Efforts by governments in China and India to cool off their own robust growth would also have a mitigating effect on Malaysia’s growth.
Yeah shared that view, saying that softening external demand is expected as the year closes but should demand from advanced countries prove to be strong, then the economic growth would too.

RAM: Economy set to grow 9pc in first half
By Jeeva Arulampalam
jeeva@nstp.com.my
2010/05/07

RAM Holdings Bhd expects the Malaysian economy to grow some 9 per cent in the first half of this year on account of strong export volumes and improving domestic demand and spending.

RAM chief economist Dr Yeah Kim Leng said that exports have rebound, with March volume having reverted to pre-crisis levels.

Malaysia's gross exports were up 30.7 per cent, and imports 35.1 per cent, in the first quarter.

"What we are seeing now is a rise in domestic demand, consumer spending, and also investments. A recovery now is on a sustainable basis," Yeah told reporters after the company's shareholder meeting in Kuala Lumpur yesterday.

According to RAM's Economic Monitor for May, Malaysia is likely to post strong gross domestic product (GDP) growth of 9 per cent or higher in the first quarter of this year.

It said the pick-up in domestic consumption, as shown by the continued uptrend in consumer loans and passenger car sales, has been evident since its trough at the height of the recession in the first quarter of 2009.

"Investor confidence, as reflected by the more robust stock market and an appreciating ringgit, is likewise on the rise," the rating agency said.

Yeah noted that external conditions have been improving, as seen in first quarter GDP growth data reported by China and the US.

China grew some 11.9 per cent, and the US 3.2 per cent, in that period.

Yeah said the debt crisis in Greece would probably have minimal impact on Malaysia and would be unlikely to hamper its recovery.

Despite Europe's sovereign debt woes, the contagion would be limited to within the continent rather than a catastrophic flight of global capital flows as initially feared, RAM said in its monthly update, noting that investors had already switched their focus to other more profitable regions.

RAM previously projected Malaysia's GDP growth this year at 4.9 per cent.

While it has yet to revise its full-year forecast, Yeah said that there was further upside to the 4.9 per cent projection.



Malaysia exports to continue strong growth in H1
By Rupa Damodaran
rupabanerji@nstp.com.my
2010/05/06
MALAYSIAN exports will continue to be strong in the first half of the year although growth may not be consistent as global government spending ends while events like Iceland's volcanic ash disrupts trade.

"In value terms, our exports during the first three months have performed higher than pre-crisis levels in 2008," Datuk Noharuddin Nordin, chief executive of the Malaysia External Trade Corp said in an interview in Kuala Lumpur yesterday.

The global recession of 2009 led to governments worldwide spending money to help revive their economies. This is coming to an end.

The volcanic ash could also hurt exports to Europe in April and May as 35 per cent of Malaysia's overseas shipments are sent by air transport.
Total exports in March, which grew 36.4 per cent or RM59.44 billion, was the highest monthly export growth after 1998.

In the first three months, exports rose 31 per cent to RM158.73 billion from the same period last year, while imports jumped 35.1 per cent to RM119.78 billion.

The turnaround in exports of electrical and electronic (E&E) products, which make up about 40 per cent of the total, played an important part.

E&E contributed RM22.31 billion in export earnings (37.5 per cent of total exports), while palm oil exports contributed RM4.42 billion.

"E&E is like a double-edged sword. It suffered a sharp decline during the crisis in 2009, yet its pervasiveness in most products today, whether in cars or phones, has (lent) strength to exports."

China now holds a larger share of Malaysian E&E products at 16.6 per cent compared to the US (15 per cent). The rest are Singapore, Hong Kong, Japan, the Netherlands and Thailand.

While Matrade is confident of achieving Bank Negara Malaysia's 11.2 per cent growth forecast for exports in 2010, he said the second-half performance depends on whether E&E growth could be sustained.



Malaysia’s March Exports Surge, Bolstering Economic Recovery
May 04, 2010, 6:16 AM EDT
By Stephanie Phang and Michael Munoz

May 4 (Bloomberg) -- Malaysia’s export growth doubled in March as the global rebound lifted demand for the country’s electronics and commodities, boosting expansion in Southeast Asia’s third-largest economy.
“Exports are now in expansion mode,” Lee Heng Guie, chief economist at CIMB Investment Bank in Kuala Lumpur, said before the report. “A rebound in global chips demand as well as the still-firm commodity prices should bode well for Malaysia’s exports.”

Malaysia increased interest rates ahead of Asian neighbors from Indonesia to China this year after the economy emerged from a recession in the final quarter of 2009. The central bank forecasts growth may rebound to as much as 5.5 percent in 2010 as exports of goods such as Sime Darby Bhd’s palm oil and Unisem (M) Bhd.’s semiconductors recover.

Bank Negara Malaysia Governor Zeti Akhtar Aziz said last week policy makers may raise the growth forecast for 2010 after reports showed an improvement in exports and production. Prime Minister Najib Razak said April 6 that the central bank told the government economic expansion can exceed the current forecast by as much as 2 percentage points through the “right policy intervention.”

The central bank is due to release first-quarter gross domestic product data this month.

“The strong improvement on the export front is the main reason for an upside surprise in headline GDP growth later this month,” Irvin Seah, an economist at DBS Bank Ltd. in Singapore, said before the report. He expects Malaysia’s economy to expand 11.1 percent in the first quarter and 8 percent this year.

Malaysia’s imports rose 45.3 percent in March from a year earlier. The trade surplus widened to 14.35 billion ringgit from 11.7 billion ringgit in February.
--Editors: Paul Panckhurst
To contact the reporter on this story: Stephanie Phang in Singapore at sphang@bloomberg.net


Malaysia March exports surge 36.4pc, beat forecasts
By Rupa Damodaran
Published: 2010/05/05

EXPORTS surged by 36.4 per cent in March, beating market expectations, on strong external demand for Malaysian products from all its major markets.

Yesterday's trade data, economists said, has enhanced Malaysia's growth prospects for the economy during the first quarter.

Bank Negara will release the first quarter numbers on May 19.

The International Trade and Industry Ministry (Miti), in releasing the March data, said the total exports amounting to RM59.44 billion, marked the highest post crisis monthly exports recorded since September 2008.

Imports in March rose 45.3 per cent to RM45.09 billion while total trade in March 2010 expanded by 40.1 per cent to RM104.54 billion compared with March 2009. Trade surplus was valued at RM14.35 billion.

Compared with February, exports increased by 26.9 per cent while imports rose 28.2 per cent.

HSBC Bank senior Asian economist Robert Prior-Wandesforde said Malaysian exports have sprung back with a vengeance in March.

Miti said March's export performance was contributed by increases in exports of electrical and electronic (E&E) products (31.8 per cent), chemicals and chemical products, (60.8 per cent), palm oil (49.3 per cent), transport equipment (188.4 per cent) as well as crude petroleum (55.8 per cent).

China, Singapore, Japan, US and Thailand were the top five export destinations, accounting for half of total exports.

Exports to Asean expanded by 45.3 per cent, accounting for 26.7 per cent of Malaysia's total exports during the month.

Month-on-month, exports to Asean increased by 27.5 per cent.

Exports to China rose by 51.2 per cent to a new monthly high of RM7.98 billion while exports to the European Union (EU) increased by 31.5 per cent, Japan (29.9 per cent increase), US (26.5 per cent increase).

Standard Chartered Bank described the March trade data as a sterling performance.

Economist Alvin Liew said the imports surge indicate companies are no longer delaying capital investments, reflecting the improving investment and consumer sentiment in Malaysia.

On the ringgit, Liew said yesterday's trade data should be positive for the currency.

According to Miti, the first quarter of 2010, total exports registered a marginal decrease of 0.2 per cent from the fourth quarter of last year while imports contracted 5.4 per cent. Total trade decreased by 2.5 per cent.


Malaysia’s trade booms as it rides Asian economic recovery
May 4, 2010 3:23pm
by Kevin Brown

Malaysia is roaring out of recession even faster than expected, with March trade figures published today beating forecasts by a wide margin. The numbers suggest east Asia’s post-crisis recovery is moving ahead even faster than expected. According to the government’s announcement, exports rose 36.4 per cent year-on-year(compared with forecasts of around 20 per cent), and imports by 45.3 per cent (forecasts of around 30 per cent).

Given Malaysia’s high exposure to trade, the numbers bode well for first quarter gross domestic product growth, which economists now see reaching up to 10 per cent and more, compared with a 6.2 per cent decline in the first three months of last year, at the height of the global crisis.The government said in March that the economy had grown 4.5 per cent in the fourth quarter compared with a year earlier.
Robert Prior-Wandesforde, senior Asian economist at HSBC, told Reuters:

It looks to us as though exports in Q1 as a whole was up strongly probably by 6.5 per cent on a seasonally-adjusted basis, which in turn bodes well for GDP. GDP will be something close to 11 per cent in Q1 and for the year as a whole it would be 7.3 per cent. The picture is one of rampant trade growth. A lot of it was intra Asia exports but exports to the US have picked up very strongly too. This is a V-shaped recovery, which in our view is sustainable and will lead to significant further upside in terms of GDP growth.

The Malaysian ringgit is the best-performing currency in Asia this year, in part because the central bank moved early to raise interest rates from the extraordinary low levels reached during the global financial crisis. The currency is also benefitting from speculation that China will allow the renminbi to appreciate against the US dollar, which would probably trigger further upward pressure on emerging Asian currencies.

The central bank said in March that it was raising rates even though the inflation threat was “modest” because the economy was recovering quickly from the crisis, removing the justification for emergency measures. Malaysia continues to enjoy ultra-loose monetary policy, although economists say rates might rise before the end of the year.

M'sia exports surge in March
KUALA LUMPUR - MALAYSIA said on Tuesday that its key exports rose 36.4 per cent in March on the back of to stronger demand for electronic goods.

The trade ministry said shipments jumped to 59.44 billion ringgit (S$25.4 billion) while imports were up 45.3 per cent to 45.09 billion ringgit.

International trade minister Mustapa Mohamed said the volume of exports were at their highest since September 2008 when the global financial crisis kicked in.
The ministry said the increase was due to stronger demand for electrical and electronic products (up 31.8 per cent), chemicals and chemical products (60.8 per cent) and palm oil (49.3 per cent).

Electrical and electronic items account for more than one-third of Malaysia's total exports to key markets such as China, Singapore, Japan, Thailand and the United States.
For the three months to March, exports fell 0.2 per cent to 158.73 billion ringgit compared with the previous quarter, while imports contracted 5.4 per cent. -- AFP



Malaysia Exports Increase More Than Expected In March
5/4/2010 6:30 AM ET
(RTTNews) - Malaysia's exports increased 36.4% on an annual basis to MYR 59.44 billion in March, the Department of Statistics said on Tuesday. This was the highest post crisis monthly exports since September 2008. Economists expected an increase of 22.4%.

Imports climbed 45.3% year-on-year to MYR 45.09 billion in March, faster than the 29.2% growth expected by economists.

On a monthly basis, exports and imports increased by 26.9% and 28.2%, respectively in March.

Thus, the trade balance showed a surplus of MYR 14.35 billion in March, making it the 149th consecutive month of trade surplus since November 1997. The trade surplus was wider than the MYR 12.8 billion expected by economists.

For the first quarter, exports dropped 0.2% compared to the previous quarter and imports fell 5.4%. During the period, the trade surplus totaled MYR 38.95 billion.

by RTT Staff Writer



Malaysia's Total Trade Up 40.1 Per Cent In March 2010
KUALA LUMPUR, May 4 (Bernama) -- Malaysia's total trade in March 2010 rose 40.1 per cent year-on-year to RM104.54 billion, riding on an upward momentum in exports and imports.

The country's exports surged by 36.4 per cent to RM59.44 billion, a new high in March, compared to the same month last year, the Ministry of International Trade and Industry (MITI) said Tuesday.

Imports expanded by 45.3 per cent to RM45.09 billion that month, the ministry said in a preliminary release of Malaysia's external trade statistics, for January-March 2010.

A higher trade surplus of RM14.35 billion was also recorded in March, up by 14.8 per cent compared to the same month last year. This was the 149th consecutive month of trade surpluses since November 1997, MITI said.

During the January-March period this year, the country's total trade increased by 32.6 percent to RM278.51 billion, supported by strong growth in exports to China, Singapore, Japan, Hong Kong, the United States, Thailand, India, Korea, Netherlands and Australia.

Exports for the period grew by 30.8 per cent to RM158.73 billion while imports rose 35.1 percent to RM119.78 billion, resulting in a trade surplus of RM38.95 billion, MITI highlighted.

Major product sectors which contributed to the significant increase in exports in March were electrical and electronic (E&E) products valued at RM5.38 billion (31.8 per cent of total exports), chemicals and chemical products at RM1.48 billion (60.8 per cent), palm oil at RM1.46 billion (49.3 per cent), transport equipment at RM1.40 billion (188.4 per cent) and crude petroleum at RM1.08 billion (55.8 percent).

China, Singapore, Japan, the United States and Thailand were the top five export destinations, accounting for 53.2 percent of Malaysia's total exports in March.

Asean accounted for RM15.89 billion or 26.7 per cent of Malaysia's total exports in March, up by 45.3 per cent from the same month last year.

Meanwhile, major import products which contributed to the significant increase in imports in March were E&E products valued at RM16.17 billion (35.9 per cent of total imports), chemicals and chemical products at RM4.28 billion (9.5 per cent), machinery, appliances and parts at RM3.75 billion (8.3 per cent) and refined petroleum products at RM2.57 billion (5.7 per cent).

The top import sources were Singapore, Japan, China and the United States, providing a 48.8 percent share of the total.

Malaysian external trade surges 40 pct in March
Tuesday, May 04, 2010 6:11 AM
KUALA LUMPUR, May 4, 2010 (Xinhua News Agency) -- Malaysia's foreign trade surged 40.1 percent year-on-year in March to hit 104.54 billion ringgit (some 31.7 billion U.S. dollars), thanks to sharp growth in both exports and imports, said trade minister.

Malaysian Trade Minister Mustapa Mohamed said in a statement issued here on Tuesday that the total exports in March recorded a new high of 59.44 billion ringgit (some 18 billion U.S. dollars), soaring 36.4 percent from the same month of 2009.
He attributed the exports hike to increases of exports of electrical and electronic products, chemicals and chemical products, palm oil, transport equipment and crude petroleum by 31. 8 percent, 60.8 percent, 49.3 percent, 188.4 percent and 55.8 percent year-on-year, respectively.

China, Singapore, Japan, the United States and Thailand remained top five export destinations for Malaysia with the exports accounting for 51.8 percent of the total in March.

Meanwhile, the imports in March surged 45.3 percent year-on- year to 45.09 billion ringgit (some 13.7 billion U.S. dollars), mainly due to higher imports of intermediate goods, which accounted for 68.2 percent of the total imports. Singapore, Japan and China were the top three import sources of Malaysia.
The trade surplus stood at 14.35 billion ringgit (some 4.3 billion U.S. dollars) in March, the 149th consecutive month seeing surplus since November 1997.
Exports to ASEAN member countries, the biggest trade partner of Malaysia by far, expanded by 45.3 percent year-on-year to 15.89 billion ringgit (some 4.8 billion U.S. dollars) in March, while imports from ASEAN totaled 12.21 billion ringgit (some 3.2 billion U.S. dollars).

On a monthly basis, the total trade for March increased 27.5 percent from February, in which the exports and imports went up 26. 9 percent and 28.2 percent respectively.
During the first quarter of 2010, total trade decreased by 2.5 percent from the previous quarter to 278.51 billion ringgit (some 84 billion U.S. dollars), with exports and imports down 0.2 percent and 5.4 percent respectively.


Malaysia's export momentum expected to continue
By Rupa Damodaran
rupabanerji@nstp.com.my
2010/05/04


MALAYSIAN exports are expected to continue its growth momentum in March, against a backdrop of an improving global economy.

Exports, according to a Business Times poll, are expected to jump 31.3 per cent while imports would rise 31.05 per cent. Economists expect the trade balance to be RM12.74 billion.

The International Trade and Industry Ministry will release the data today.

DBS Bank expects Asian demand to continue driving Malaysia's export recovery, says its economist Irvin Seah.

"On the other hand, the introduction of newer models of smartphones as well as pent-up demand for consumer electronics are expected to have significant impact on electronics export sales."

Also, global semiconductor sales in February posted the strongest pace of growth (56.2 per cent year-on-year) since the dotcom boom period.

"Such strong readings are reflective of a robust cyclical upswing in electronics demand which will boost overall export performance in the months ahead. "

US bank Citi concurred, saying March export numbers translates to sizeable year-on-year gains despite fading base effects.

"We still see some room for electrical/electronics exports to increase, propped up by global information technology demand (consumer demand in China and some retail growth in US as well), though likely at a more modest pace," said economist Kit Wei Zheng.

Imports will expand faster than exports as a stronger ringgit could lead to manufacturers buying more goods used to make finished products.