Exports are expected to be volatile in the coming months as external headwinds brought on by slower growth in the developed economies continue to be a drag on demand.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed yesterday announced figures on exports which surprised on the upside mainly due to higher commodity exports to China and India.
Economists in a Bloomberg survey expected June's exports to grow by a median 5.8% year-on-year and imports by 2.2%.
Mustapa said in a press release that Malaysia's exports for June expanded 8.6% to RM57.35bil from a year ago while imports rose 6.3% to RM49.75bil.
He said the year-on-year exports growth was largely contributed by higher exports of palm oil, refined petroleum products, liquefied natural gas and crude petroleum.
Mustapa said these commodities collectively contributed 88% to the growth in exports for the month.
Economists expect the coming months to show volatile exports figures with inventories only cautiously being built up, which would impact demand for commodities including crude oil, where prices have weakened since peaking at end-April.
As June's exports were largely supported by higher commodity exports, the drop in consumption shown by consumer spending in the United States would mean lower prices as demand falls.
This has shown up in global purchasing managers indices including that of the United States, which fell more than expected in July, indicating manufacturers continue to be cautious about the outlook.
AmResearch Sdn Bhd director of economic research Manokaran Mottain described exports for the coming months to be volatile and unpredictable.
“We remain cautious as we can't say for sure that demand is coming back,” he told StarBiz yesterday.
Manokaran said the supply disruptions due to the disaster in Japan has not been totally ironed out as historically, one-tenth of Malaysian exports were channelled to Japan.
He said the next two months would show weaker export numbers with a weak third quarter overall for exports.
Bank Islam Malaysia Bhd chief economist Azrul Azwar said while intra-Asian trade had grown in recent years, the traditional markets such as the US and Europe remained crucial.
Singapore, China, Japan, the US and Thailand were the top five export destinations, accounting for 50.3% of the country's total exports in June while exports to Asean accounted for 25.6%.
“Whatever we export to China and India still ends up in the developed economies, therefore whatever happens over there will matter to Malaysian exporters,” Azrul added.
He said the single-digit growth in exports would continue into the fourth quarter.
For June, exports to China expanded by 9.5% to RM7.31bil year-on-year, exports to Asean rose 13.1% to RM14.67bil and exports to Japan expanded by 9.5% to RM5.61bil.
Exports to the US declined by 7.3% to RM4.96bil and exports to the European Union declined by 1% to RM5.79bil.