RAM Ratings: Malaysia’s exports growth to rebound in July

PETALING JAYA: RAM Ratings expects ’s export growth to rebound to 23.1% in July, following the slower growth of 10% in June.

The rating agency said in a statement today that the pick-up was underscored by the anticipated improvement in domestic industrial output, in line with stronger demand from , and Japan.

Similarly, RAM said the import growth is expected to accelerate to 20%, although still lagging behind exports for the third consecutive month.

RAM said this comes as domestic restocking activities continue moving towards an optimal level, thereby reducing incremental demand for imports and the need for a surge in import of intermediate and capital goods that was experienced at the beginning of the year.

In addition, it said both exports and imports will also be boosted by the low-base effect in July, arising from the year-on-year decline in July 2016.

Under this scenario, the trade surplus is projected to come in at RM4.1 billion in July 2017.

“As a crucial part of the integrated global value chain for electrical and electronic products, Malaysia – as well as other major producers such as Singapore, South Korea and Taiwan – is expected to continue benefiting from the current up-cycle for global electronic products.

“Although this positive momentum remains intact, demand is expected to moderate once inventory requirements have been fulfilled and with the current electronics growth cycle coming to an end after the release of the next wave of towards the end of 2017,” it said.

Meanwhile, RAM said mineral fuels are also expected to remain among the strong drivers of overall exports, led by sustained demand for energy to support increasing industrial activities and stabilising global oil prices.

However, RAM said the nominal growth of mineral fuel exports is expected to moderate through the next few months as crude prices softened temporarily in May and June.

“Brent crude prices typically lead the mineral fuel export value index by three-four months; as price weakness kicks in, this reduces the product’s contribution to growth,” it added.

Source: The Sun Daily

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