KUALA LUMPUR: Malaysia will likely sustain its robust trade performance this year, in line aligning the country's projected gross domestic product growth of 4.0-5.0 per cent, economists said.
The optimistic outlook is underpinned by the ongoing recovery of global demand for Malaysian products, particularly with China's economy showing signs of accelerated growth, they added.
The country's trade grew 12.1 per cent year-on-year in April to RM211.74 billion, a fourth consecutive month of expansion.
Investment, Trade and Industry Ministry said this was in line with global trade recovery, adding that exports in April 2024 rebounded by 9.1 per cent year-on-year to RM114.72 billion after two consecutive months of contraction.
"The growth was contributed mainly by higher exports of machinery, equipment, and parts, chemicals and chemical products, crude petroleum, palm oil, and palm oil-based agriculture products, as well as iron and steel products," the ministry said in its statement today.
Putra Business School lecturer Associate Professor Dr Ahmed Razman Abd Latiff expects the overall trade growth to remain in the coming months barring any major global conflict affecting demand of Malaysia's products.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the export growth had turned positive after two consecutive months of contraction.
Afzanizam said Malaysia has seen the global purchasing managers index (PMI) for manufacturing stayed above 50-point for four consecutive months, suggesting that the manufacturing sector is likely to expand further.
"Given that the manufacturing sector accounted for 85 per cent of total exports, Malaysia should be able to experience the spillover effect from the turnaround in the global manufacturing sector. I would say that the exports should be able to maintain a positive growth in the period to come," he said.
For the 48th consecutive month since May 2020, Malaysia experienced a trade surplus of RM7.7 billion.
The first four months of 2024 recorded the highest values ever for the period for trade, exports and imports.
"Trade grew by 8.3 per cent to RM912.27 billion compared to the corresponding period last year. Exports increased by 3.8 per cent to RM477.05 billion, and imports were higher by 13.7 per cent to RM435.22 billion, resulting in a trade surplus of RM41.83 billion," the ministry said.
"Compared to March 2024, trade, exports, imports, and trade surplus in April 2024 were lower by 9.3 per cent, 10.8 per cent, 7.6 per cent and 39.4 per cent, respectively," it added.
Although the total trade was higher in the first four months of this year, economist Dr Geoffrey Williams emphasised that the trade balance was low at only RM7.7 billion. This is is the lowest since April 2020 at the start of the Covid-19 pandemic.
The trade balance fell 39.0 per cent year-on-year and 39.4 per cent month-on-month. In the first four months the trade balance was 45.7 per cent lower than the first four months of last year.
"It is the net trade or trade balance that adds to overall economic growth. So the contribution to overall growth is still being squeezed by global conditions despite the increase in total trade. This is due to a faster increase in imports than exports.
"The trade balance has been flat since the pandemic and on a downtrend since July of last year. It appears to be continuing flat or downwards at the moment and is likely to remain so during the year," Williams explained.
He remains optimistic on the outlook of trade performances this year, but warned that there are emerging concerns about the trade balance, as imports are growing faster than exports, potentially squeezing the trade surplus.
"We may continue to see growth in total trade, but this will be due to imports growing faster than exports, which is squeezing the trade balance. The long period of trade surpluses over the last 48 months may come to an end, albeit briefly, during this year," he added.