Coming off a strong 2014, Malaysia is forecasting the slowdown of its trade and export pace this year as the global economy turns tepid, and plans to concentrate on growing its export sales to the Association of Southeast Asian Nations (ASEAN).
Malaysia’s trade and exports are expected to grow at 2% to 3% each this year, lower than the 5.9% and 6.4% achieved in 2014, respectively, said the Ministry of International Trade and Industry (MITI).
Trade and Industry Minister Mustapa Mohamed said the forecast takes into account the following: the weakening global economy from 3.8% to 3.5%, uncertainty in currency market, decline in oil prices, and likely continued modest growth in commodity prices.
“We don’t see a sharp uptrend. The two growth forecasts have taken into account these factors,” he added.
He said crude oil prices have been hovering around US$50 per barrel in the past few days, but believes that the US$55 per barrel forecast this year by MITI is achievable, and recovery in oil price is expected next year.
On the currency, Mustapa said the weaker ringgit will make Malaysian exports more competitive especially in the electrical and electronic (E&E) sector. “Overall, Malaysia’s exports will be more competitive although many people argue that it is not a very strong positive point. That’s why we expect 2% to 3% growth in trade and exports,” he added.
The ministry is confident of achieving another year of trade surplus despite the lower targets this year. Last year, the trade surplus grew 16.6% to RM83.11 billion (US$23.14 billion), marking the 17th consecutive year of trade surplus.
Trade, export picture in 2014
Total trade grew 5.9% to RM1.45 trillion last year from RM1.37 trillion a year ago while exports rose 6.4% to RM766.13 billion, surpassing the forecast export growth of 6% in the 2014/2015 Economic Report. Imports rose 5.3% to RM683.02 billion.
Mustapa said manufactured goods bolstered export performance, growing by 7.1%, and exports to the ASEAN were higher, making up 28% of total exports.
Exports of almost all manufacturers grew, contributing RM587.25 billion or 76.7% share of total exports. The E&E segment was the top performer, growing 8.1% to RM256.1 billion and accounting for 33.4% of Malaysia’s total exports.
The ASEAN market accounted for 26.8% of Malaysia’s total trade last year, valued at RM389.03 billion with an increase of 3.9% from 2013. Exports to ASEAN increased by 5.9% to RM213.58 billion. Exports to all ASEAN markets grew last year except for Indonesia, which fell 4.1% to RM31.76 billion.
Mustapa said with the weak global economy and uncertainty in Europe, Malaysia’s focus for 2015 will be on ASEAN markets and new markets such as Africa and South America.
“Traditional markets will continue to play an important role in driving Malaysia’s growth rate but beyond that, we are looking at ASEAN which is important and also some new markets. That’s how we are trying to deal with the slowing down in world economic growth,” he said.
Photo: (WT-en) Paulwee
