In a research note today, RHB Research said this was due to a smaller merchandise trade surplus amid a stronger import growth outlook that would likely outpace the increase in exports.
“A higher deficit in the services and income accounts, resulting from the pick-up in economic growth, will also result in a narrow surplus,” it said.
Commenting on the current account surplus in the balance of payments which had widened to RM9.6 billion in the second quarter of the year (2Q17), from a surplus of RM5.3 billion in 1Q17, the research house said it was due to a larger surplus in the merchandise trade balance.
“It was also due to a smaller deficit in services and investment income accounts, but this was partly mitigated by the wider deficit in the current transfer account,” it said.
The deficit in the services account narrowed to RM5 billion in 2Q17 from a deficit of RM6.2 billion in the previous quarter, which was due to larger net travel receipts and receipts for manufacturing services.
“Likewise, the deficit in the income account narrowed to RM8.2 billion in 2Q17 from a deficit of RM9.9 billion in 1Q17, reflected by the smaller income repatriations made by multinational companies in Malaysia back to their home countries.
“As a whole, overall balance of payments reversed into a surplus of RM2.7 billion in 2Q17, after a deficit of RM1.7 billion in 1Q17,” it added.