EXPORTS from Malaysia are likely to show a slight improvement in May, mostly on base effects, although global headwinds continue to affect the external demand in the region.
The International Trade and Industry Ministry will release the data today.
A Business Times poll expects exports to grow by 4.44 per cent, imports by 7.68 per cent and the trade balance to average RM7.36 billion.
Bank of America Merrill Lynch expects a softer palm oil and oil prices to continue to weigh on exports, while import growth likely hovered at about the same rate as domestic demand remained resilient.
It has also projected the trade surplus to shrink to only about RM6.2 billion, the smallest surplus in about two years.
DBS Bank economist Irvin Seah said external headwinds remain strong and will weigh on the export and industrial performance.
"Purchasing Managers' Index (PMIs) of key export markets have been heading south again lately while indicators on the global electronics cycle are pointing towards an easing in the recent inventory restocking process."
As far as Malaysia is concerned, improvement on the external front cannot possibly be sustained with the eurozone stuck in its economic turmoil and the recovery momentum in US increasingly turning more sluggish.
Even Asia's demand, though still fairly resilient, is gradually showing signs of ebbing, he said.
The trade data will likely show improved export performance but Seah says it is mostly due to the base effects, as it receives a huge technical lift from the poor set of export numbers in the same period last year.
On a sequential basis, Seah said Malaysian exports had a sharp drop of about 12 per cent month-on-month in March, followed by a slight bounce back of about 1.5 per cent in April. But he expects a dip of about 0.2 per cent month-on-month in May which is more reflective of the current external conditions.
"So if we net out the sequential changes over the last three months (including May), we're still down about 11 per cent".
Citi remarked that for May, Japan's imports from Malaysia surged 22.4 per cent while Singapore's imports accelerated to 10.9 per cent.
China's imports from Malaysia however dipped by more than half to -9.3 per cent.
In the case of exports to Malaysia, the number surged 59.5 per cent year-on-year. Japan's exports rose to 3.5 per cent while Singapore's exports slowed to 5.6 per cent.