Malaysia's July exports likely to be lower

By Rupa DamodaranPublished: 2009/09/07

MALAYSIA'S exports in July are expected to be lower from a year ago as major economies continue to be weak while lower commodity prices would also be a factor.

Malaysia's major export markets are Singapore, the US, China and Japan, and most of them are still feeling the effects of the global recession.

The Business Times poll found that exports are likely to fall 24 per cent while imports would also decline 21.8 per cent from a year ago.

Economists also think that the average trade balance for July is expected to total RM9.82 billion as the value of exports continues to exceed imports.

The International Trade and Industry Ministry will release the data today.

TA Research economist Patricia Oh said July exports could fall harder because the numbers were very high last year.

"In July 2008, exports had risen at the quickest pace in nearly four years, staging a 25.4 per cent year-on-year growth due to the encouraging spillover from the spiraling crude oil price."

Crude oil price hit a record of US$147 (RM518) a barrel in July last year.

However, she expects the trade balance to stay big as imports also continue to contract.

OCBC Bank economist Enrico Tanuwidjaja said demand from the US, an important market for Malaysian electrical and electronic exporters, is still weak.

US consumers are still reeling from a bust property market and massive layoffs that are hurting spending.

"We expect external demand to remain weak in the third and fourth quarters before a moderate pick-up in the first quarter of next year," he said.

However, Citi economist Kit Wei Zheng thinks that July could show a a third positive month-on-month growth.

"The fairly broad based improvements in June export data, with electrical/electronics showing the sharpest moderation in rate of decline, also hint at a more decisive recovery in the second half of the year," he said.