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419774
Sat, 10/08/2016 - 06:06
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https://oananews.org//node/419774
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Trade To Remain Modest For Rest Of 2016 & 2017 Despite Uptick In August Exports - RHB
KUALA LUMPUR, Oct 8 (Bernama) -- Malaysia’s trade activities are envisaged to remain modest for the rest of the year and into 2017, despite the uptick in August exports amid a tepid global growth outlook, said RHB Research Institute.
"Exports will likely be outpaced by imports as domestic demand will likely remain a key driver of growth," the research house said in a report released Friday.
The Ministry of International Trade and Industry announced Friday that trade surplus in August rose to a whopping US$2.04 billion (RM8.51 billion) from RM1.91 billion registered in July 2016 due to a record increase in exports to ASEAN, India, the United States (US), Mexico, Turkey, Hong Kong and the European Union (EU). (US$1 = RM4.15)
Exports in August 2016 was at an eight-month record high at RM67.58 billion, up 1.5 per cent, from July's exports of RM59.8 billion, it said.
"The rebound in exports was led by a rebound in both electrical and electronics (E&E) and non-E&E exports while commodity exports fell at a smaller margin.
"External demand was lifted by a pick-up in exports to the US while exports to the EU rebounded and shipments to Japan and China declined at a slower rate," RHB Research said.
As a whole, global trade activity continues to remain sluggish as evidenced by the global merchandise trade contracting for the 22nd consecutive month since October 2014, with the magnitude of decline picking up in July.
"The weak global economic outlook and increasing uncertainty suggest that Malaysia's exports will likely remain sluggish in the second half of 2016 and in 2017," it said.
However, the commodity trade surplus is expected to widen slightly in tandem with a recovery in commodity prices after the end of El Nino, especially for liquefied natural gas, which generally lags crude oil prices by 3-6 months.
As a result, this will likely translate into a larger merchandise trade surplus during the year. Likewise, the services account is projected to record a slightly smaller deficit in 2017 as the tourism sector recovers gradually.
"These will, however, be partly offset by a larger deficit in the income account, contributed by higher repatriation of profits by multinational companies, following a spike in foreign direct investment this year."
RHB Research also expected the repatriation of salary by foreign workers to increase next year, in tandem with the steady growth of foreign workers here.
Nevertheless, a relatively resilient growth in imports due to ongoing infrastructure spending could partially erode the trade surplus in 2017.
Overall, the current account surplus is expected to improve in 2017, but only modestly to RM20.2 billion or 1.6 per cent of Gross Domestic Product (GDP), from an estimate of RM15.9 billion or 1.3 per cent of GDP in 2016.
-- BERNAMA