Published June 5, 2009

Malaysia's April exports down 26.3%, more than analysts expected

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(KUALA LUMPUR) Malaysia's exports shrank by 26.3 per cent in April from a year ago, falling considerably more than the 22 per cent analysts had expected.

Economists said yesterday that a significant improvement will only take place in the second half.

Exports fell to RM41.12 billion (S$16.9 billion) in April on an annual basis, the government said.

Only a relatively smaller fall in exports to China at 9.4 per cent prevented a worse outcome, while electronics exports, the mainstay of Malaysia's economy dropped by 23.2 per cent from a year earlier.

'This number is a bit disappointing. There should be an improvement in the second half,'said Kit Wei Zheng at Citibank. 'The question is how fast it improves and nobody expects the improvement will be in a straight line.'

Economists said the sharp decline in April exports was largely due to a high base from strong commodity prices last year.

'It also reflects continued contraction in external demand, especially in the US, where they are still building precautionary savings, resulting in reduced spendings,' said Lee Heng Guie, chief economist at CIMB Investment Bank.

'Although we have seen some signs of stabilisation in the global economy, and firm commodity prices, we will still not be able to escape double-digit declines in exports going into the third quarter. We may see single-digit declines in the fourth quarter. In summary, exports will contract 20- 25 per cent for the full year. It was definitely a weak start to the second quarter.'

Malaysia is Asia's third most trade dependent economy after Hong Kong and Singapore relative to the size of its economy and the April trade data, after surprisingly muted falls in recent months, showed the country was finally catching the full force of the global economic downturn.

'This kind of deterioration in the trade position is something we have been expecting for months and had almost given up hope of seeing. It is a key reason why our foreign exchange analysts are relatively bearish of the ringgit,' said Robert Prior-Wandesforde, an economist at HSBC.

South Korea reported earlier this week its May exports fell 28.3 per cent compared to expectations of a 23.2 per cent drop.

Malaysia's imports in April were down 22.4 per cent from a year earlier to RM33.76 billion compared to a forecast of a 27.4 per cent decline.

The trade balance showed a surplus of RM7.36 billion against economists' projection of RM12.1 billion. -- Reuters