Thursday, December 4, 2008

Malaysia's October annual exports suffer surprise drop

KUALA LUMPUR: The country's exports unexpectedly fell in October from a year ago, the latest evidence that it is being hit by falling demand from abroad because of the global economic slowdown.

The 2.6% decline from a year ago compared with economists' expectations for a 6.3% rise in a country where trade is more than 100% of gross domestic product, or the value of all goods and services produced.

"We are likely to see much weaker numbers for Malaysia going forward with external demand very weak, and with the unlikelihood that demand for electronics will recover anytime soon," said Alvin Liew, an economist at Standard Chartered.

Exports dipped slightly in July 2007 but the last big fall was in March 2007 when they fell 4.5%.

Imports for October fell by 5.3% year-on-year compared with analyst expectations for a 1.8% rise.

The data comes after South Korea saw exports slide by 18.3% in November, the biggest drop in seven years, and amid tumbling oil and commodity prices, key exports for Malaysia.

Exports totalled RM53.46 billion, down from RM62.31 billion in September, while imports fell to RM43.84 billion.

That ate into the trade surplus, which fell to RM9.62 billion in October compared with RM14.5 billion in September.

Malaysia has pinned its hopes of avoiding a recession on boosting exports to Asia, although the October data showed exports to the 10 countries that make up Asean fell by 6.1% from a year ago and exports to China fell to RM4.89 billion from RM5.26 billion on weaker commodity and oil prices.

Malaysia hopes to record economic growth of 3.5% in 2009, but many economists say it will not manage that. Investment bank UBS sees no growth at all.

The poor trade data may spur Malaysia's central bank into action after its first rate cut in five years earlier this month when it shaved 25 basis points off its key rate to 3.25%.

"The central bank will look into at least another 25 basis points. I'm looking at 50 basis points in January and February," said Gundy Cayhadi, economist at

Source: Edge Daily

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