Watch Out For Surprises To The Downside
Cooling external demand looks set to weigh heavily on Malaysia's Q213 real GDP growth data when the Department of Statistics releases its quarterly reading on August 21. High frequency data for merchandise trade, manufacturing activity, and investment spending, are all pointing at a relatively weak GDP reading for Q213. Overall, our core view that Malaysia's full-year real GDP growth will miss the government's target of 5.0-6.0% is playing out nicely, and we are happy to maintain our growth forecasts at 4.6% for 2013.
Narrowing Trade Surplus
Looking at the trade figures published by Bank Negara Malaysia (BNM), we highlight that Malaysia's trade surplus has narrowed substantially in recent months, with the figure tracking April's record low of US$0.3bn (based on data dating back to 2005) to come in at just US$0.8bn in May. This compared to the average monthly trade surpluses of US$2.6bn and US$3.2bn recorded in 2012 and 2011 respectively, suggests that net exports are likely to have contributed very little to headline growth in Q213. Exports of manufactured goods - including semiconductors, electronics, petroleum products, and chemicals - have fluctuated between contraction and expansion territory since the beginning of the year ( see chart). We expect this trend to persist through the remaining quarters of this year.
|Signs Of A Weak Quarter|
|Malaysia - Trade Exports & Imports, US$mn (LHS) & Trade Balance, US$mn (RHS)|