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Weak China, Europe demand hit Malaysia exports

September 7, 2012

Global sluggishness is beginning to pinch Malaysia's vital export sector, say analysts.

KUALA LUMPUR: Malaysia’s exports slowed further in July as falling demand in China and Europe overshadowed a rise in shipments to regional markets and the United States, data showed today.

Exports rose just 1.9% to RM58.12 billion (US$18.65 billion) last month, compared with June’s 5.4% increase and 6.7% in May, according to the trade ministry.

The latest figures are also well off the 7.1% jump seen in July 2011.

Analysts said global sluggishness was beginning to pinch Malaysia’s vital export sector and would likely last throughout the third quarter to the end of September before key market China, which is also suffering slowdown, stabilises.

Exports to China dived 13.1% to RM7.03 billion while debt-wracked Europe imported just RM4.86 billion worth of goods, a 20.6% drop that marks a fourth successive monthly decline.

However, shipments to other Southeast Asian countries climbed 17.8% to RM17.17 billion, making up almost a third of the total, while exports to the United States grew 14.6% to RM5.47 billion.

But while the problems being encountered by global heavyweights are hitting Malaysia’s exports, rising imports show domestic demand is holding up, said Yeah Kim Leng, chief economist with financial research firm RAM Holdings.

Imports were up 9.5% to RM54.5 billion in July, more than halving June’s trade surplus to RM3.62 billion.

“With the trade balance still positive, the increased imports are not a cause for concern. While exports will continue to decelerate this quarter, we hope a stimulus in China will help recovery in the fourth quarter,” he said.

Total trade grew 5.5% for the first seven months of the year, with exports up 3.3% over the same period.

Southeast Asia’s third-largest economy, resource-rich Malaysia relies heavily on exports of commodities such as palm oil and energy products, as well as electronics and other manufactured goods.

China, the world’s number two economy, supplanted Singapore last year as Malaysia’s top export market.



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