PETALING JAYA: Malaysia’s exports are likely to remain subdued in 2019, growing at a modest pace between 4% and 6%, due to factors such as slower demand from major trading partners, weaker global semiconductor sales and softer commodity prices, according to analysts.
Exports rebounded in December 2018 despite the uncertainties caused by the ongoing US-China trade dispute, with growth re-accelerating to 4.8% year-on-year in December against 1.6% in November, pushing full-year growth to 6.9%.
Kenanga Research said in a note yesterday that it expects 2019 would be a challenging year for the country’s exports primarily weigh by the on-going trade tension between US and China, prospect of cooling global growth, China’s slowing economy as well as sluggish demand for commodities.
“While China has been aggressively supporting its domestic economy to prevent a hard landing, we are cautiously optimistic of a positive outcome from the ongoing trade talks between US and China.
“Compared to a sterling growth performance of 18.8% in 2017, total exports for 2018 grew at a slower pace of 6.7%, slightly lower than house forecast of 7%,” it added.
For 2019, the research house forecasts exports to grow between 4-6%, in line with a slower projected gross domestic product (GDP) growth of 4.7% from an estimated 4.8% in 2018 on the back of slower global trade and economy.
In a separate note, AmBank Research said going forward, it expects a softer export growth of between 4.5% and 5%, and imports to also grow around 4–4.5% on the back of slower capital expansion.
The research house added that exports growth in 2019 will depend on private expenditure i.e. consumption and investment.
On trade outlook, PublicInvest Research said it believes that trade may remain volatile in the next two months as the outcome of trade negotiation will only be known by the end of February.
“We are cautiously optimistic that trade situation may improve beyond February that may be a precursor to the reacceleration and normalisation of global trade,” it noted.
However, the research house said the agriculture sector may continue to face some headwinds in the first quarter of the year in line with the guidance given by Bank Negara Malaysia.
“With end of December elevated inventory levels of 2.6-2.7 million tonnes, and no sign of demand resurgence, we think the supply-shock conditions may continue for quite some time and hence potentially being a drag on the economy.
“We have yet to see tangible results in the fiscal intervention to support the crude palm oil (CPO) price and therefore, remain cautious that CPO price may remain flat at RM2,200 per tonne in 2019,” it added.
Source: The Sun Daily