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Malaysia's Dec 2021 trade surplus beats JP Morgan, consensus estimates

28/01/2022 05:37 PM

KUALA LUMPUR, Jan 28 -- Malaysia’s December trade balance recorded a larger surplus at US$7.4 billion (RM30.99 billion), ahead of JP Morgan’s US$6.6 billion forecast and the consensus estimate of  US$5.3 billion.

In its Asia Pacific emerging markets research note, the US investment bank said the trade surplus was driven by strong exports.

Malaysia’s trade continued to expand in December 2021, registering another record high monthly value for trade, export, and trade surplus.

Trade rose by 26.8 per cent to RM216.71 billion compared to December 2020, the eleventh consecutive month of double-digit growth since February 2021.

Exports increased by 29.2 per cent to RM123.85 billion, the fifth consecutive month of double-digit expansion since August 2021; imports were higher by 23.6 per cent to RM92.86 billion while trade surplus surged by 49.5 per cent to RM30.99 billion.

JP Morgan said as COVID-19 related export disruptions continue to abate in December, overall exports expanded a further 1.6 per cent month-on-month due mainly to a solid expansion in technology-related exports, which were up 9.1 per cent month-on-month.

Overall imports declined 2.2 per cent month-on-month with the bulk of the contraction due to a fall in intermediate goods imports, which were down 8.7 per cent month-on-month.

“As intermediate goods imports typically feed into tech exports, this could imply some downside risk to the near term, tech-related exports outlook,” it said. “Alongside the resumption in economic activity, investment goods imports extended their November’s gains and were up 3.0 per cent month-on-month, last month.’’

JP Morgan said as the emergence of the Omicron variant domestically could raise near-term uncertainties, it is maintaining current forecasts at this juncture as Malaysia’s high vaccination rates might imply a higher tolerance for future outbreaks, in turn reducing the need for broad mobility restrictions.

“Looking ahead, we expect labour conditions outside the goods-producing sectors to catch up next year alongside the broader resumption in services, in turn guiding core prices higher, albeit at a gradual pace.

‘’Thus, we continue to expect monetary policy tightening of 25 basis points each in third quarter and fourth quarter 2022,’’ it said.

Overall, Malaysia’s external trade registered another historic performance in 2021, surpassing RM2 trillion (US$477.2 billion) for the first time.



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