KUALA LUMPUR (Nikkei Markets) - Malaysia's November export growth rate decelerated sharply to 1.6% from a year earlier, crimping the trade surplus as sales of electronics items plunged to two-year low.
Exports in November totaled 84.79 billion ringgit ($20.49 billion), according to data released by the Ministry of International Trade and Industry. That compared with October's 17.7% year-on-year gain. On a month-on-month basis, exports declined 12% in November.
Economists said Malaysia, a key exporter of electrical and electronics products, faces headwinds from a tariff tussle between its major trading partners U.S. and China although recovery in shipments of commodities such as natural gas and palm oil could help cushion the blow.
"Looking ahead, we expect higher commodity export volumes to offset volatility in external demand for manufacturing goods which continues to face headwinds from the U.S.-China trade tensions," CIMB Investment Bank Economists Michelle Chia and Lim Yee Ping wrote in a note to clients.
China's commerce ministry has confirmed that vice-ministerial level trade talks with the U.S. will be held in Beijing on Jan. 7 and Jan. 8. The discussions follow weak economic indicators in both countries recently that have added to concerns about a global economic slowdown.
Shipments of electrical and electronics goods, which accounts for more than one-third of Malaysia's total exports, fell 1.7% in November from a year earlier, the first decline since March 2018. Petroleum product shipments climbed 41.2% in November.
In terms of markets, exports to Malaysia's largest trading partner China rose 3.9% year-on-year in November. Exports to Singapore gained 7.1%.
The rise of low-cost manufacturing and assembly in Asean countries such as Vietnam poses threat to Malaysia, said MIDF Amanah Investment Bank. That requires Malaysia's electrical and electronics industry to shift toward higher-value-added segments to remain competitive, it said.
Imports, meanwhile, rose 5% to 77.24 billion ringgit in November, led by modest gains in capital and consumption goods. On a month-on-month basis, imports decreased 3.5% in November.
Trade surplus more than halved to 7.55 billion ringgit in November from 16.31 billion ringgit in October and was 24% lower when compared to 9.93 billion ringgit recorded in the same month last year.