KUALA LUMPUR (NewsRise) - Malaysia's exports unexpectedly contracted in July, weighed by lower shipments of key electronics goods and commodities including natural gas and palm oil, official data Wednesday showed.
Exports in July totaled 59.9 billion ringgit ($14.8 billion), a 5.3% decline from 63.3 billion ringgit recorded during the same month last year, according to data from the Department of Statistics. That compares to the median 1.9% rise predicted by economists and June's 3.4% year-on-year growth.
The latest data suggests a sluggish global growth, and coupled with weakening domestic demand, raises the odds of Bank Negara Malaysia lowering the interest rate later this year to boost growth in a slowing trade-reliant economy, economists said.
"Given the weak start to third quarter's export data, we anticipate... BNM to keep the door open for further monetary easing," said United Overseas Bank economist Julia Goh.
The central bank kept the benchmark Overnight Policy Rate unchanged at 3.00% on Wednesday, cautioning "high" downside risks to global growth. "Overall, the economy is projected to expand within expectations in 2016, and to remain on a steady growth path in 2017," it said.
Shipments of electrical and electronics, which account for 36% of Malaysia's total exports, fell 6.0% in July from a year. Exports of natural gas plunged 25% while palm oil declined nearly 10% year-on-year.
In terms of markets, exports to Malaysia's largest trading partner China fell 22%. Exports to E.U. and Japan fell by 2% and 15% respectively while exports to the U.S. rose 4.1% in July.
Exports fell 9.9% in July when compared to June and was down 10% on seasonally adjusted terms, the government said.
Imports meanwhile shrank 4.8% to 57.9 billion ringgit in July from 60.8 billion ringgit a year earlier, mainly due to lower demand for intermediate goods and consumption goods.
On a month-on-month basis, imports fell 4.9% in July and was down 9.2% on seasonally adjusted terms.
Trade surplus narrowed sharply to 1.9 billion ringgit in July from June's 3.6 billion ringgit and was 19% lower when compared to the same month a year earlier.
"We foresee that export and import will continue to experience negative growths in August following [July's] weaker performance in addition of continued sluggish performance by commodity-based products," said JF Apex Securities.
The Nikkei Malaysia Manufacturing Purchasing Managers' Index, or PMI, dropped to 47.4 in August from 48.1 in July, suggesting sharper deterioration in operating conditions amid declines in output, new orders and employment. Job cuts was also the fastest in over three years, the data showed.