Malaysia's Trade in July 2010

Malaysia Refrains From Raising Main Interest Rate as Global Rebound Cools
By Shamim Adam - Sep 3, 2010 12:00 AM GMT+0800

Malaysia’s central bank left interest rates unchanged after three consecutive increases, choosing to support growth as the global recovery slows.
Bank Negara Malaysia kept its benchmark overnight policy rate at 2.75 percent, it said in a statement in Kuala Lumpur yesterday, a decision that was predicted by 15 of the 17 economists surveyed by Bloomberg News. The other two expected a quarter-point increase.

Malaysia started raising interest rates before any other Asian central bank this year to reduce what officials say is the risk of financial imbalances caused by keeping borrowing costs too low for too long. The region’s efforts to withdraw monetary stimulus introduced to counter last year’s global recession may slow as policy makers from the U.S. to Japan take steps to shore up growth amid signs their economies are cooling.

“The second-half outlook is gloomier globally and the strength in the Malaysian economy will be unlike what we saw in the first half,” said Wellian Wiranto, a Singapore-based economist at HSBC Holdings Plc. “It looks like they are done for the year and the question now is whether they are going to keep it unchanged for much of 2011. With Malaysia being one of the first ones to move, 2.75 percent may be what they deem as normal.”
Exports by Malaysian companies such as Sime Darby Bhd. and Unisem (M) Bhd. rose at the slowest pace in eight months in July, a report from the trade ministry showed yesterday.

Exports Cool
Malaysia’s export growth has slowed in recent months along with shipments from other countries in the region, the central bank said. “These conditions are expected to continue with the slowing of global growth,” it said.
Still, Malaysia’s growth will be supported by “robust domestic economic activity” even as the external developments may moderate the pace of expansion, Bank Negara said.
The ringgit is the best performer in Asia excluding Japan in 2010 as the economy strengthened and the central bank raised rates. The currency, which has gained 9.5 percent this year, traded at 3.1275 per dollar at 6:31 p.m. yesterday.
Malaysia’s economy, the largest in Southeast Asia after Indonesia and Thailand, grew near the fastest pace in a decade last quarter, with gross domestic product climbing 8.9 percent from a year earlier. Governor Zeti Akhtar Aziz said last month growth may exceed 6 percent in 2010 even as the expansion in advanced economies may ease in the second half.

Ahead of Curve
“Bank Negara is slightly ahead of the curve compared to its regional peers in normalizing rates,” Lee Heng Guie, chief economist at CIMB Investment Bank in Kuala Lumpur, said before the decision. “More signs of global weakness, in particular growing concerns over a double-dip recession in the U.S., a moderate pace of domestic growth and the fading effects of fiscal stimulus” may prompt Malaysia to pause the rest of the year, he said.
The U.S. economy grew at a 1.6 percent annual pace in the second quarter, less than previously estimated. Japan expanded at the slowest pace in three quarters in the period ended June 30 as global demand cooled and stimulus effects wore off.
The prospect of slowing global growth may encourage Indonesian policy makers, who have refrained from following neighbors in boosting borrowing costs this year, to continue to keep rates unchanged when they meet today, according to 16 out of 17 economists surveyed by Bloomberg News.

Thailand’s Move
Other Asian central banks are still raising rates to curb inflationary pressures as their economies expand. The Bank of Thailand raised its benchmark on Aug. 25 and signaled further increases after the economy overcame political unrest to grow faster than estimated last quarter.
The Reserve Bank of India has boosted its key rate more times than any other Asian counterpart this year to cool consumer prices that are rising at more than 11 percent. The Bank of Korea is alert to inflation and may need to raise interest rates again even with a slower-than-expected global recovery, central bank Governor Kim Choong Soo said last week.
“The Monetary Policy Committee considers the current monetary policy as appropriate and consistent with the latest assessment of the economic growth and inflation prospects,” Malaysia’s central bank said. At the current level of the benchmark rate, “the stance of monetary policy continues to remain accommodative and supportive of economic growth.”
Malaysia’s rate increase in March was the first in almost four years. The overnight policy rate was kept at 3.5 percent from late April 2006 until late November 2008, when the central bank started to cut the benchmark, bringing it to a record-low 2 percent in February 2009.
The central bank’s final policy review of 2010 will be in November.
To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net


Malaysia July Exports Growth Slows
9/2/2010 6:10 AM ET
(RTTNews) - Malaysia's exports increased at a slower pace in July, a report by the Department of Statistics showed on Thursday.

Exports increased 13.5% on an annual basis to MYR billion in July, but slower than 17.2% in the previous month. This was the second highest monthly export value recorded in the first seven months of 2010. Economists had expected an increase of 11.5%.

Imports climbed 18.1% year-on-year to MYR billion in July, slower than the 18.6% rise expected by economists'. In June, imports grew 30.1%.

On a monthly basis, exports and imports increased by 4.9% and 3.5%, respectively in July.

Thus, the trade balance showed a surplus of MYR 7.01 billion in July, making it the 153th consecutive month of trade surplus since November 1997. The trade surplus was wider than the MYR 6.1 billion expected by economists.

For the first seven months of the year, exports dropped % compared to the same period of the previous year, while imports fell %. During the period, the trade surplus totaled MYR billion.

Malaysian economy expanded at a slower pace in the second quarter. The gross domestic product, or GDP grew 8.9% year-on-year in the second quarter, but down from 10.1% in the previous quarter.

by RTT Staff Writer

Malaysia July exports higher on better E&E demand
Published: 2010/09/03

THE country's exports rose higher than expected in July, led by an improvement in external demand for electrical and electronic (E&E) products.
The International Trade and Industry Ministry (Miti) said yesterday the exports, amounted at RM55.43 billion, were the second highest monthly value recorded so far this year.
Apart from E&E products, the year-on-year increase was also largely contributed by higher exports of liquefied natural gas (LNG) and refined petroleum products.
Imports expanded by 18.1 per cent to RM48.41 billion, while a trade surplus of RM7.01 billion was recorded during the month.

CIMB Investment Bank chief economist Lee Heng Guie expects the pace to slow in the second half due to a softer global demand and as the low base effects disappear.
Demand from China, one of Malaysia's leading trading partners, has also come off compared to the previous months.
CIMB, however, is sticking to its export growth forecast of 17.5 per cent for 2010, based on 9 per cent average growth over the next five months.
Domestic demand, added Lee, has to hold up as the economy goes through a slower pace.
"Imports have also slowed down significantly from June. These are early signs that the domestic demand will not be as strong (as the first half) and other lead indicators that we track like car sales have come off from highs."
Standard Chartered Bank said the latest data reinforced the view that Malaysia's export growth peaked in the first quarter.
Meanwhile, Miti said on a month-on-month basis, exports in July 2010 rose by 4.9 per cent, imports grew by 3.5 per cent and total trade increased by 4.2 per cent.
All the export markets enjoyed a growth momentum, with Singapore leading with 13.2 per cent, followed by China (12.1 per cent), US (10.1 per cent) and Japan (9.5 per cent).
Exports to the European Union expanded 18.7 per cent in July.
Exports to Asean were RM13.31 billion, an increase of 3.6 per cent from a year ago. This was due to higher exports of E&E products, palm oil, machinery, appliances and parts, optical and scientific equipment as well as chemicals and chemical products. - By Rupa Damodaran

Friday September 3, 2010
Exports data show more sustainable growth rate
By FINTAN NG
fintan@thestar.com.myPETALING JAYA:

Malaysia’s exports declined for a fourth month in July, with the latest data from the Statistics Department released yesterday showing exports grew 13.5% to RM55.43bil from a year ago.
Imports expanded by 18.1% to RM48.41bil from a year ago while on a month-on-month basis, July exports rose 4.9% and imports were up 3.5%.
The year-on-year exports data topped the 11.5% median expectations of economists in a Bloomberg survey with the increase mainly attributed to higher exports of electrical and electronic products, liquefied natural gas, refined petroleum products, crude petroleum and palm oil among others.
CIMB Investment Bank Bhd economic research head Lee Heng Guie told StarBiz the pace of economic growth was now more sustainable when recent regional data was taken into account.
“The first-half was characterised by a spurt of growth due to exports, recovery in domestic demand and the low-base effects.
“Going forward, we can expect this to moderate to a more sustainable pace,” he said.
Lee said this trend was evident not only among economies in the region but also in Malaysia, where exports and factory output as measured by the industrial production index had shown slower growth.
He said the country’s economic outlook was still tied to external factors including the US’ and China’s economic performance.
“China’s growth trend-line shows that its economy will continue to post a slower growth rate while we continue to believe that the US will show sub-par growth in the second-half due to the declines in house sales and jobs,” Lee said.
He added that while there would be no double-dip recession, the risk was still there.
“There is a 30% chance of it happening,” he said.
Meanwhile, Standard Chartered Bank South East Asia economist Alvin Liew said in an email reply that the slowdown reinforced the house’s view that the country’s export growth peaked in the first quarter.
Although import growth slowed markedly, he said it still outpaced exports.
Liew said this could mean that “resilient domestic demand and higher capital investment by companies likely drove import demand, although concerns about the external economy may have dampened import appetite”.
AmResearch Sdn Bhd senior economist Manokaran Mottain pointed out that of the country’s major trading partners, at least four of them still registered respectable growth rates.
“About half of our exports can still be sustained and we can be assured that the slowdown will not be severe and our overall growth rate will not feel the impact too much,” he said.
Manokaran said gross domestic product for the third quarter would expand between 7% and 8%, which would still be comparable to the second quarter’s 8.9% growth rate.
Slower Malaysia's July exports expected
By Rupa Damodaran

MALAYSIAN exports are expected to grow at a slower double-digit pace in July, indicating the economy probably peaked in the first half of 2010.

A Business Times poll expects exports to grow by an average of 11.73 per cent, down from June's 17.2 per cent year-on-year.


Imports would also slow to a growth of 17.08 per cent from 30.1 per cent while the trade balance is set to average RM6.44 billion.

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

Standard Chartered Bank economist Alvin Liew expects a "quite marked" moderation in growth in July.

"It will reinforce our view that Malaysia's export growth peaked in the first quarter and we are heading for a less rosy second half."

He also expects imports growth to ease in July although the pace is likely to be faster than exports.

"Resilient domestic demand and higher capital investment by companies are the likely the drivers for import demand although concern for the external economy may have dampened import appetite."

Citi economist Kit Wei Zheng said the slowdown was possible as the growth in China's imports from Malaysia had halved in July to 36.1 per cent from 76.3 per cent year-on-year in June.

"With exports to China consisting of around 12 per cent of total exports, this could imply a drag on overall export growth."

Kit expects exports to show a small decline given the fall in nominal CPO prices and the strengthening of the ringgit against the US dollar in July.


M'sia July exports up 13.5%
KUALA LUMPUR - MALAYSIA said on Thursday its exports, the mainstay of the economy, rose 13.5 per cent year-on-year in July due to higher demand for electronic goods, the country's main exports.

The trade ministry said in a statement that shipments had risen to 55.43 billion ringgit (S$23.8 billion), while imports were up 18.1 per cent to 48.41 billion ringgit, producing a surplus of 7.01 billion ringgit.
The increase was contributed by higher exports of electrical and electronic products, liquefied natural gas, palm oil, chemicals and chemical products.
Electrical and electronic items account for about 40 per cent of Malaysia's total exports to key markets like Singapore, China, United States, Japan and Hong Kong.
Export-dependent Malaysia, Southeast Asia's third-largest economy, was hit hard by the global slowdown and its economy shrank 1.7 per cent last year.
The economy has since rebound and grew 8.9 per cent year-on-year in the second quarter, the central bank said last month, with growth expected to exceed six per cent in the full year. -- AFP