KUALA LUMPUR: Malaysia’s trade is targeted to hit RM2 trillion this year, according to International Trade and Industry Ministry, despite easing 2.5 per cent to RM1.83 trillion last year from RM1.88 trillion in 2018.
Analysts pointed that Malaysia’s export had fallen to its lowest level last year since the global financial crisis in 2009 but still expect a 1.5 per cent growth this year.
The country’s export dropped marginally 1.7 per cent to RM986.4 billion from RM998.01 billion in 2018, while imports declined 3.5 per cent to RM849.01 billion from RM877.74 billion.
“Export contracted by 1.7 per cent year-on-year (yoy), slightly higher than our estimate of a 1.1 per cent contraction yoy. It was the first contraction since the global financial crisis (-15.7 per cent yoy in 2009), mainly due to the rising protectionism, loss of growth momentum of world’s major economies and lower global commodity prices,” MIDF Research said today.
The firm, however, noted that the performance was not in isolation.
“We observed similar performance in other key economies such as Singapore, Indonesia, Thailand, South Korea and Japan which also recorded a decline in exports due to mostly externally driven issues.”
MIDF Research said overall, Malaysia had posted its first export growth in five months.
“Malaysia total trade recorded positive growth in December 2019 at 1.9 per cent yoy, ending a six-month contraction streak as both export and import grew. Export expanded by 2.7 per cent yoy after four consecutive months of negative growth.”
Deputy International Trade and Industry Minister Dr Ong Kian Ming said it had set total trade target of RM2 trillion prior to the coronavirus outbreak, with a two per cent growth for both import and export.
“This is still a good target as we were not able to reach it last year. Perhaps with the improving global situation and global trade as well as crude oil and crude palm oil, it will be beneficial to Malaysia,” Ong said at a press conference on the trade performance here today.
He said the lower trade last year had been dragged by softer global demand due to trade tensions and unfavourable external economic conditions.
“The decline in total trade was also due to lower demand from Malaysia’s major trading countries, especially with Singapore, Hong Kong, France, Thailand and Japan.”
He added that Malaysia’s export was also affected by the downturn in semiconductor and lower commodity prices including crude palm oil and crude oil.
Ong said Malaysia’s trade surplus registered a double-digit growth for three consecutive years, widening by 11 per cent to RM137.39 billion from RM123.78 billion recorded in 2018.
“This was the largest trade surplus since 2009, representing Malaysia’s achievement of 22nd consecutive year of trade surplus,” he added.
He attributed the surplus to a decline in import compared to export, which could be due to slowdown of electrical and electronic global supply chain.
“But I do not think it is a big worry. As long as our domestic manufacturing is still on the rise, it will help our local supply chain,” he said.