KUALA LUMPUR: Malaysia's export growth of nearly 10 per cent year-on-year in February has beaten market consensus of a 4.2 per cent expansion, economists said.
The pick-up in exports to China will support trade in the coming months as Malaysia stands to benefit from the reopening of the former's economy.
Still, the economists expect Malaysia's exports and imports to expand slower this year.
International Trade and Industry Ministry on Monday said the country's trade performance was still on the upward trajectory as exports grew 9.8 per cent to RM112.28 billion last month.
Overall trade registered a double-digit year-on-year growth or 11 per cent to RM204.99 billion.
The country's imports expanded 12.4 per cent to RM92.71 billion, the ministry added.
"Trade, exports and imports registered the highest monthly value for February," it said, adding that the trade surplus stood at RM19.56 billion, which was 34th consecutive month of surplus since May 2020.
Year-to-date, the total trade rose 6.1 per cent to RM412.17 billion compared to the same period in 2022.
Exports expanded by 5.4 per cent to RM224.93 billion and imports climbed 7.0 per cent to RM187.24 billion. The trade surplus during the two months edged down marginally 1.8 per cent to RM37.69 billion.
Analysts at MIDF Research said the country's total trade remained above RM200 billion for the 12th straight month and growing for the 27th month since December 2020.
"Expanding external demand for electric and electronics (E&E) and commodities, particularly petroleum and palm oil, will continue to drive export growth this year.
"However, the performance of commodity trade will be subject to the price effect, as current prices are relatively lower than last year," the firm said.
MIDF Research maintained Malaysia's slower exports and imports growth projection at 9.2 per cent and 9.5 per cent year-on-year respectively this year, driven by the improvement in trade numbers in February.
The firm said trade with free trade agreement countries would grow, boosted by the ratification of trade agreements namely the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
It said several downside risks to trade outlook could come from weaker global demand, elevated inflation, excessive policy tightening and possible re-escalation in geo-political and trade tensions.
Meanwhile, Bank Muamalat Malaysia Bhd head of economics and market analysis Mohd Afzanizam Abdul Rashid said the outlook was likely to be increasingly challenging with the tightening of global monetary policy expected to take a toll on the external demand.
"As such, Malaysia's exports would not be insulated given the openness of our economy. Concerns over the banking sector in the US in particular is a symptom that the aggressive monetary tightening by the major central banks would start to take effect this year.
"Not to mention the geo-politics which likely shape economic and foreign policies across the globe," he said.
Putra Business School economic analyst Associate Prof Dr Ahmed Razman Abdul Latiff said the positive trade growth registered in February was primarily due to the gloomy trade growth performance in February 2022.
Ahmed Razman said such positive growth generated in February this year, would not be replicated in March due to the continuous downward trend of exports and import values for the last five months.
"The downward trend was caused by slower global demand triggered by central banks imposing high interest rates."I expect we will see a further reduction of trade balance in the next few months as well as lower export value," he added.