Malaysia’s May trade surplus narrowed the most in nearly a year after exports unexpectedly shrunk due to plunge in shipments of crude oil and natural gas, official data on Friday showed.
Exports in May totaled 59.9 billion ringgit ($14.97 billion), down 0.9% from 60.5 billion ringgit in the same month last year, according to data from the Department of Statistics. That compares to a median forecast of 2.0% year-on-year growth predicted by economists and April’s 1.6% expansion. May’s surprise decline in exports was the first in four months, Nikkei reported.
Economists say indicators, including Nikkei Malaysia Manufacturing Purchasing Managers’ Index for June released on Friday, suggest that exports growth will likely remain weak in the months ahead amid uncertainties surrounding the UK’s exit from the European Union.
“Given looming global challenges and a higher export base in the second half of last year, we expect stagnant export growth” in the second half of this year, said United Overseas Bank’s economist Julia Goh.
Shipments of electrical and electronics, which account for more than one-third of Malaysia’s total exports, rose 3.2% in May while palm oil and palm-based products grew 1.3%. Crude petroleum exports plunged 40% while liquefied natural gas dropped 29%.
“Given lingering concerns over the Brexit outcome, we assessed that Malaysia’s exposure would be largely confined to financial channels,” said UOB’s Goh.
The effects from Brexit through trade and investment would be “limited given that exposure to UK is small,” she said, noting that the UK accounts for 1% of total trade, 1.7% of tourist arrivals and 4.3% of foreign direct investment into Southeast Asia’s third largest economy.
On a month-on-month basis, exports fell 2.3% from 61.3 billion in April and were down 1.6% on seasonally adjusted terms.
The Malaysia PMI for June came in at 47.1, down from May’s 47.2, as manufacturing business conditions continued to worsen. Production contracted at the sharpest rate in over three-and-a-half years, led by a marked fall in new orders, said Markit economist Amy Brownbill.
Imports, meanwhile climbed 3.1% to 56.7 billion ringgit in May from a year earlier, thanks to inflow of capital and consumption goods. Intermediate goods, which account for more than half of total imports, however decreased 0.2% in May.
