A construction site near the Malaysia landmark, Petronas twin tower in Kuala Lumpur, Malaysia, on Jan. 20, 2015. (EPA Photo/Azhar Rahim)
Malaysia’s Feb. Exports Down, Much More Than Expected Amid Oil Slump
BY :TRINNA LEONG
APRIL 03, 2015
Kuala Lumpur. Malaysia’s exports fell 9.7 percent in February from a year earlier, the biggest drop since September 2009, due to a slump in oil prices and a weakening Chinese economy that cut demand for commodity shipments.
Imports edged up and that trend is likely to continue, economists said, putting pressure on the current account and on the ringgit, one of the weakest currencies in Asia this year with a drop of nearly 5 percent against the dollar.
“The export figure confirms that Malaysia’s growth momentum is starting to decelerate quite sharply, weighed down by China,” said Chua Hak Bin, an economist at Bank of America Merrill Lynch.
Malaysia’s exports were strong in the first half of last year, so a high base may have exaggerated the drop in February, but Chua said the export number was “reflective of the fact that commodity prices have continued to slip”.
Imports were up 0.4 percent from a year earlier due to an increase in electrical and electronic products, as well as metal products, according to the data released by Malaysia’s statistics department on Friday.
Consumer spending is likely to slow after the implementation of a new 6 percent consumption tax on goods and services on April 1 but imports are still expected to grow.
“Bear in mind that a lot of infrastructure and investment projects are still going ahead,” Chua said, adding that imports of capital and intermediate goods could be high.
A Reuters poll had forecast exports would drop 1.9 percent, while imports were expected to rise 1.4 percent.
The trade surplus for the month halved to 4.5 billion ringgit ($1.2 billion) from 9.01 billion ringgit in January.
Such a sharp drop threatens a further narrowing in the current account surplus and more pressure on the ringgit, Chua said.
In February, the ringgit edged down to 3.64 per dollar from 3.63 at the end of January. It was trading at 3.66 to the dollar on Friday.
Weakness in the ringgit has helped support exports of the country’s mainstay electrical and electronic products but February’s data showed that shipments from the sector contracted slightly, while there was a continued drop in exports of energy and commodities.
Shipments to China declined 21.3 percent from a year earlier.
“The weak demand from China, Japan and Europe is probably outweighing the slightly stronger demand from the US,” Chua said.