February 7, 2018 8:40 pm JST

Malaysia's December exports growth slows sharply

Trade minister flags modest 5% growth this year amid risk of protectionism

Shipments of electrical and electronics goods, which accounts for more than one-third of Malaysia's total exports, increased 6.2% in December from a year earlier. © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysia's exports growth will likely moderate this year after expanding at its fastest pace in more than a decade in 2017 as lurking risks of protectionism somewhat mars robust trade prospects.

Shipments grew 4.7% from a year earlier in December to 79.3 billion ringgit ($20.3 billion) and rose 18.9% for the entire 2017, the highest growth since 2005, according to the Department of Statistics. That compares to November's 14.4% year-on-year gain. On seasonally-adjusted basis, exports in December fell 8.2% on-month.

"Going forward, we have a few uncertainties on the horizon with the biggest being the rise of protectionism," International Trade Minister Mustapa Mohamed said at a news conference. This year, total trade growth will likely moderate to 5% from 19.4% because comparison with 2017's strong expansion pace will shrink the reading, he said.

Economists said the deceleration in December exports was largely distorted by festive season, and forward-looking data on manufacturing conditions of major trading partners and other industrial powerhouses signal a rebound in Malaysian exports in the months ahead.

"All indicators remain positive," said Alan Tan, an economist at Affin Hwang Investment Bank. "Trade surplus will remain substantial in 2018 and exports, particularly electronics, will bounce back and be reflected in the second-half of the year."

Exports will probably grow 7%-to-8% this year, while imports will likely increase 9%-to-10%, Tan said. Trade surplus could come in at around 95 billion ringgit ($24.3 billion), estimates Tan.

Shipments of electrical and electronics goods, which accounts for more than one-third of Malaysia's total exports, increased 6.2% in December from a year earlier, while palm oil and palm-based products fell 0.4%. Exports of refined petroleum products shrank 6.2%.

In terms of markets, exports to Malaysia's largest trading partner China surged 12.8% year-on-year in December followed by an 11.4% gain in shipments to European Union.

"Moving forward, we foresee Malaysia's economy to stay on upward trajectory in 2018 amid rising industrial goods imports and optimistic business confidence," MIDF Amanah Investment Bank said in an investor note.

Imports rose 7.9% to 72.1 billion ringgit in December, driven by capital goods. Imports of intermediate and consumption goods fell. On a month-on-month, seasonally adjusted basis, imports shrank 9.8% in December.

Trade surplus narrowed 19.1% on year to 7.3 billion ringgit in December. The surplus also shrank 27.2% on month. However, on a full-year basis, trade surplus rose 10.3% to 97.25 billion ringgit, its widest since 2012.

  --Jason Ng

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