Exports To Advance Higher This Year

Economic Research	20 February 2017
Malaysia
Economic Update
Exports To Advance Higher This Year We sense that there is a real demand recovery in global trade, prompting us to raise our export growth forecast to a strong 6% for 2017, from our earlier expectation of 2%. Export growth has been at a sluggish pace of less than 2% over the last two consecutive years. Our more bullish forecast is on account of: 1.   Recovery in demand for commodity products, aided by higher prices; 2.   Pick-up in global semiconductor sales in late-2016, translating into higher electrical & electronics (E&E) exports; 3.   Improving global trade outlook as global growth prospects improve. GDP revised up to 4.5%. Underlying this is an upward adjustment in real exports to 3.9%, and hence our GDP projection for 2017. Net export is expected to contribute 0.6 ppts to real GDP growth in 2017. Current account surplus to widen to MYR33.7bn or 2.7% of GDP, after it registered a larger-than-expected 2% of GDP surplus in 2016. This is also an upward adjustment and would likely allay concerns of a potential twin deficit (current account and fiscal), and provide support to the MYR. Economist:  Vincent Loo Yeong Hong  | +603 9280 2172 Economist:  Aris Nazman Maslan  | +603 9280 2184