KUALA LUMPUR, June 20 — Strong import volumes will bode well for domestic economic activities, exports, and forex earnings, research firms said.
In a note today, AmBank Research said any singular focus on exports as an engine of growth may be misleading as there is a strong positive impact on domestic economic growth with both exports and imports.
“We expect exports to grow by 26.0 per cent in 2022 (26.0 per cent in 2021) while imports by 25.0 per cent in 2022 (23.3 per cent in 2021).
“Upwards revision was due to higher average selling prices which are seen compensating for any shortfalls from volume affected by supply disruptions and labour shortages,” AmBank Research said.
For the full year of 2022, the research house said its base-case gross domestic product (GDP) growth projection remains unchanged at 5.6 per cent with an upside of 6.0 per cent, while its downside is at 4.8 per cent.
“Growth will be supported by the full reopening of the economy and better vaccination management which will improve private consumption and business condition, and strengthened by firm commodity prices, continuous robust exports and manufacturing upswing, especially in the electrical and electronic (E&E) subsector,” it said.
Malaysia’s total trade rose 33.6 per cent to RM228.37 billion compared to May 2021.
Although exports increased 30.5 per cent to reach RM120.49 billion, imports grew by 37.3 per cent to RM107.88 billion, resulting in the trade surplus contracting by 8.3 per cent to RM12.62 billion.
Meanwhile, CGS-CIMB Securities Sdn Bhd said that increases in imports of intermediate goods (5.4 per cent month-on-month (m-o-m), 34.1 per cent year-on-year (y-o-y)) and consumption goods (2.6 per cent m-o-m, 19.3 per cent y-o-y) could be a sign of restocking activities among businesses against the backdrop of demand recovery, and it could also reflect imported inflation.
“The import unit value index, with a one-month lag, rose 2.5 per cent m-o-m and 10.8 per cent y-o-y in April, accelerating from 1.3 per cent m-o-m and 7.5 per cent y-o-y in February 2022.
“Inflationary pressure may persist amid the ringgit’s weakness and elevated commodity prices. In any case, Malaysia’s trade balance could point south if these factors persist,” it added.
