KENANGA RESEARCH SEES OPTIMISTIC EXPORT OUTLOOK

KUALA LUMPUR, Aug 5 (Bernama) -- The recovery in Malaysia's export demand is showing sign that the 'black swans' in the first quarter of this year have finally begun to taper off by the end of the second quarter.

Kenanga Research, in its Economic Viewpoint report, said Malaysia's exports picked up in June to 8.6 per cent from 5.4 per cent year-on-year in May, making it significantly above consensus median (Bloomberg survey) estimate of 5.8 per cent.

It said for the first half 2011, exports grew by 7.9 per cent from 28.9 per cent in the same period a year ago.

"The increase was largely due to a higher demand for commodities and commodity-based products," it said.

Kenaga said imports also exceeded expectations, up 6.3 per cent year-on-year from 5.6 per cent in the previous month.

For the first half of this year, imports grew by 9.6 per cent from 32.5 per cent in the same period in 2010, it said.

Trade surplus, it said, narrowed to RM7.60 billion (US$2.524 billion) in June, from RM8.49 billion (US$2.819 billion) in May.

It said looking at the monthly trend, the outlook was generally more optimistic, with all top export destinations showing a growth -- Singapore, Chin and Thailand by 16.8 per cent, 4.2 per cent and 9.2 per cent respectively.

"Only Japan showed a downward trend, down by 6.7 per cent in June," it said. Kenanga said along with the US finally agreeing on a debt plan, coupled with eurozone's continued efforts to quell the debt contagion as well as strong rebound from Japan, the global economy has finally begun to pick up heading into the second half of this year.

"This allows us to retain our gross domestic product projection for the whole year at 5.7 per cent," it said.

It said inflationary threats, however, continued to loom over the domestic as well as the global economy.

"The monetary authorities need constant vigilance to ensure that whatever decision it makes will not hinder growth of the economy," it said.