Research houses: Decline in the trade balance expected in 2022

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Malaysia’s exports increased by 30.0% year-on-year in the second quarter of 2022, with a 26.1% year-to-date increase over the last six months, mainly due to export diversification Malaysia, led by the electrical and electronics (E&E) sector and high commodity prices. ― AFP photo

Thursday July 21, 2022 11:38 MYT

KUALA LUMPUR, July 21 ― Research firms have predicted a weaker trade balance for Malaysia in 2022 given rising imports relative to exports. In a research note today, Kenanga Research expects the trade surplus to be relatively small amid rising imports driven by strong consumption and investment activity.

“Similarly, our growth is still sensitive to downside risks, and we are holding gross domestic product (GDP) growth for the second quarter of 2022 (Q2 2022) at 7.7% (Q1 2022: 5.0%) , supporting 2022 headline GDP. forecast growth of 5.0% to 5.5% (2021: 3.1%),” he added.

Malaysia’s exports increased by 30.0% year-on-year in Q2 2022 (Q1 2021: 22.0%), with a year-to-date increase of 26.1% over the last six months, mainly due to Malaysia’s export diversification, driven by electrical and electronics (E&E) sector and high commodity prices.

The trade surplus stood at RM21.9bn in June 2022 (May: RM12.7bn) as exports rebounded strongly month-on-month at 21.3%, far outpacing imports at 15.2%.

“Furthermore, we believe the uptick in trade performance was also due to the weak ringgit and in part to the improvement in the global supply chain as China gradually reopened its economic activities.

Meanwhile, CGS-CIMB Research said it kept its current account surplus forecast for 2022 at 1.7% of GDP.

He added that the reopening of international borders from April 1, 2022 and the subsequent arrival of foreign tourists could offset the weakening of the trade balance given that there are more inflows into the services account. ― Bernama

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