Palm oil to provide lift to export figures

Palm oil and palm kernel oil are expected to lend a boost to Malaysia’s export numbers in August as the demand for Malaysia’s key electronic products continue to weaken said economists.

They expect export potential to face challenging times ahead on weakening global demand.

The International Trade and Industry Ministry will release the data today.

A Business Times poll expects exports to grow by 8.33 per cent (from 7.4 per cent in July), imports by 6.89 per cent and the trade balance to average by 9.52 per cent.

US investment bank Citi said the growth of exports in August is largely due to base effects.

The electrical and electronics sector will likely remain soft, said economist Kit Wei Zheng, with the continued cyclical slowdown in electronics although the supply disruption from Japan has waned.

“We expect strong commodity exports to continue to provide uplift to exports,” he said.

China continued to register a surge in imports from Malaysia with 28.1 per cent in August from 22.7 per cent in July while Singapore also registered faster imports from Malaysia with 11.9 per cent in August (from 2.9 per cent in July).

Risks are on the downside, said economist Irvin Seah of DBS Bank.

“Absolute dollar value of exports will fall by RM2.4 billion compared with the previous month, partly due to stronger currency but mainly on account of weaker demand,” he said, adding that the Hari Raya festive season may have also impacted export sales.

Going forward, Seah expects export sales to depend on the key E&E exports, which are expected to languish given the sharp fall in consumer sentiment in recent months.

The US SEMI book-to-bill ratio has fallen back to 0.80 in August from 0.98 in April.

Global semiconductor sales have started to contract.

“Hope is pinned on the resilient demand in Asia to provide the much needed lift but that too may dim if the economic woes in the US and eurozone remain protracted.”

He said festive season demand towards the end of the year could provide additional boost but the uplift may be weaker-than-expected, given the dire economic conditions.”

OCBC Bank’s Gundy Cahyadi expects a low basis effect to prop the annual import growth figure back to the double-digit territory.

“It will be interesting to see the kind of trend seen in the imports of capital goods. Falling imports (of capital goods) in recent months are reasons to be slightly worried of with regards to the overall growth prospect in 2022.”

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