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Economy to hit US$370 billion this year

KUALA LUMPUR: Malaysia’s strong trade performance will help push the local economy to grow more than nine per cent to more than US$370 billion this year, economists said.

The country kept its growth momentum with trade, exports and imports registering the highest monthly value for the month of October.

Trade expanded 21.1 per cent to RM245.18 billion from October 2021, and was the 21st consecutive month of double-digit growth, the International Trade and Industry Ministry said today.

The country’s exports rose 15 per cent to RM131.63 billion, the 15th consecutive month of year-on-year (y-o-y) expansion.

Imports was higher by 29.2 per cent to RM113.54 billion while trade surplus dropped 32 per cent to RM18.09 billion.

“The export growth was boosted mainly by higher shipments of petroleum products, electrical and electronic products, liquefied natural gas (LNG) as well as crude petroleum.

“Exports of LNG registered the highest monthly value thus far,” the ministry said.

Exports to major trading partners notably Asean, China, the United States, the European Union and Japan are growing.

For the first 10 months of 2022, trade, exports and imports surpassed the value recorded in 2021.

Trade expanded 31.6 per cent to RM2.375 trillion compared to the same period of 2021 and exports increased 28.5 per cent to RM1.29 trillion.

Imports exceeded RM1 trillion mark for the first time, rising 35.4 per cent to RM1.085 trillion, while trade surplus grew 1.3 per cent to RM205.61 billion.

Juwai IQI chief economist Shan Saeed said the country’s trade numbers should be up by 10-20 per cent for 2022 as the ministry and its agency Malaysian Investment Development Authority had done a good job in tapping the markets and maintaining stability in the commerce landscape.

“Malaysia has managed it well. As of September 2022, trade numbers are up 31 per cent, export numbers are up 30 per cent and FDI is up 21 per cent.”

Shan said Malaysia’s average gross domestic product (GDP) growth had touched 9.36 per cent after three quarters with the last quarter’s performance having exceeded expectations at 14.2 per cent.

“Malaysia will continue to remain relevant in the global trade and commerce landscape because of macroeconomic stability, educated labour force, modern infrastructure and strategic geography.

“Malaysia’s GDP size is expected to hit US$372 billion this year. Malaysia continues to remain on global investors radar with GDP going above 9.0 per cent by year end,” Shan said.

Bank Islam Malaysia Bhd chief economist Firdaos Rosli said Malaysia’s trade had performed better than expected amid sluggish global market conditions and muted customer demand.

“Imports growth still outstrips exports, but it is expected amid a strong US dollar environment. It is also comforting to note that Malaysia is importing more capital goods following the full economic reopening in the second quarter of 2022.”

Firdaos said the downside risks to trade growth would remain as the external environment became more ominous.

“However, there is a lag in our trade numbers, so I don’t think we will see such an impact on our trade performance quickly enough. As such, Malaysia’s trade performance towards end-2022 will still be healthy.

“Besides, a favourable US dollar-ringgit exchange rate can give us the necessary boost in exports in the immediate term,” he added.

Putra Economic Business School economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff said October trade number had further confirmed the continued economic growth shown by the earlier data of 14.2 per cent of Q3 GDP growth.

He said higher demand for Malaysia’s main exports such as E&E was further boosted by higher commodity prices in oil and gas.

In addition, the weakening ringgit against the US dollar make Malaysia’s exports more competitive, which was highlighted in the continued double-digit growth every month.

“Nevertheless, it also resulted in higher import costs and therefore further decreased our trade surplus,” Ahmed Razman added.


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