Rajiv Biswas, Asia Pacific Chief Economist, IHS Markit
- Malaysian exports soared 32.5% year on year (y/y) in May, boosted by double digit growth rates in all major export sectors.
- The strong performance of Malaysia’s export sector will help to underpin GDP growth in the second quarter of 2017 as well as for the 2017 calendar year, with IHS Markit forecasting that Malaysian GDP growth will rise from 4.2% in 2016 to 4.9% in 2017.
- Manufacturing exports performed very strongly, rising 32.7% y/y in May, boosted by a 31.3% rise in exports of electrical and electronic products, which accounted for 36% of total Malaysian exports. The seasonally adjusted IHS Markit Global Electronics Purchasing Managers’ Index continued to signal strength in the May survey, recording a level of 56.3, little changed from the 56.4 level posted in April. Global new orders for electronics rose for the 12th consecutive month in May, with the rate of expansion of new orders reaching the highest level since August 2014. This continues to signal a positive outlook for Malaysia’s electronics sector in the second half of 2017. IHS Markit forecasts that total global semiconductors industry revenue will grow 12.1% in 2017.
- May exports were also boosted by strong exports of agricultural goods, which were up 25.4% y/y. This strong performance from agricultural exports was helped by a 27.5% y/y rise in exports of palm oil and palm oil products in May.
- Exports of mining goods also rose sharply, up 32% y/y, due to higher volumes and values of crude petroleum exports compared to a year earlier.
- For the first five months of 2017, Malaysian exports of manufactures increased by 21.6% y/y, with exports of agricultural goods up 27% y/y and exports of mining goods up 31% y/y.
- A particularly positive aspect was the strong growth in exports to China, which surged 51.5% y/y in May and 44.3% y/y for the first five months of 2017.
- Improving growth momentum in the EU is also helping to boost Malaysian exports, with exports to the EU rising 29.7% y/y in May and 24.5% for the first five months of 2017.
- Exports to the other ASEAN countries were also robust, with exports to Singapore up 45% y/y and exports to Indonesia up 45.7% y/y in May. Exports to ASEAN frontier markets were also buoyant, with exports to Myanmar up 89.9% y/y and exports to Cambodia rising 64.2%. Buoyant Malaysian exports to the rest of ASEAN reflect the strong economic growth momentum of the ASEAN economies as well as the importance of strengthening bilateral trade ties between Malaysia and the rest of ASEAN in recent years.