MAL: Economic Update - Nov exports pick up to 2.1%

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	7 January 2015 Malaysia
Economic Update  |  PDF
Nov exports pick up to 2.1%
Author(s): Julia GOH +60 (3) 2261 9097, Jarratt MA
▊ Exports rebounded to 2.1% yoy in Nov 2014 (vs. -3.2% in Oct), which was above our expectations (-0.7%) and consensus (-0.3%). The rebound was due to: 1) the larger-than-expected rebound in E&E exports, as the strong intermediate imports in the past few months translated into higher exports, 2) an increase in crude petroleum exports due to higher volumes that offset lower prices, and 3) a lower base in Nov 2013. The trade surplus widened, as imports slowed relative to exports. Looking ahead, we expect lower commodity prices to put some pressure on overall export growth, although this would be cushioned by the E&E, machinery and chemical segments. As such, we expect export growth of 4.1% in 2015 (vs. our estimate of 6.2% in 2014).   News Export growth rebounded to 2.1% yoy in Nov 2014 (vs. -3.2% in Oct). YTD, exports have risen 6.8% yoy (vs. +1.4% in 11M13). On a 3-month moving average basis, exports declined 0.1% mom in Nov (vs. +2.1% in Oct). Import growth slowed to 0.1% yoy (vs. +9.1% in Oct), resulting in a wider trade surplus of RM11.1bn in Nov (vs. +RM1.1bn in Oct). Analysis The rebound was due to higher E&E shipments (+7.1% yoy in Nov vs. -4.5% in Oct). Non-E&E exports also rebounded slightly (+1.5% in Nov vs. -2.5% in Oct), being weighed down by lower exports of palm oil (-13.3% in Nov), LNG (-7.3%), metal products (-14.9%), petrol products (-6.1%) and rubber products (-4.7%). There was some support from chemicals (+10.4%) and crude petroleum (+12.5%). We observed acceleration in export growth to most regions, including ASEAN (+13.3%), the US (+16%), Japan (+9.6%) and the EU (8.6%), while exports to China continued to decline (-14.6%). Import growth slowed due to a decline in consumption imports (-1.7%) and moderation in intermediate imports (+3.4%), offset by more capital good imports (6.3%). Implications The export growth rebound in Nov was due to: 1) the larger-than-expected rebound in E&E exports, as the strong intermediate imports in the past few months translated into higher exports, 2) an increase in crude petroleum exports due to higher volumes that offset the falling prices, and 3) a lower base in Nov 2013. Looking ahead, we expect lower commodity prices to put some pressure on export growth but this should be partly offset by improving exports of other manufactured goods such as E&E, machinery and chemicals. We note that lower oil prices should be supportive of regional and global demand, albeit with a slight lag. We foresee improvement in E&E exports as the SEMI book-to-bill ratio stood at 1.02x in Nov (signifying better billings moving forward) and further recovery is expected in the US.           |           | Previous "Economic Update" reports... 6/1/15  PH:  Dec CPI falls further to 2.7% 1/1/15  CHN:  Slowing industrial readings; further easing expected 31/12/14  MAL:  Nov loan growth accelerated
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