Exports forecast to rebound 2.7% this year, Azmin says

KUALA LUMPUR – Malaysia’s external trade for 2021 is expected to remain modest, with exports projected to rebound by 2.7%, said the International Trade and Industry Ministry.

Minister Datuk Seri Mohamed Azmin Ali, in a statement today, said the outlook for this year is expected to be better as the World Bank and International Monetary Fund have forecast a rebound in global growth by 4% and 5.5%, respectively.

“For world merchandise trade volume, the World Trade Organisation has projected a 7.2% growth in 2021.

“In tandem with improvements in global growth and international trade, Malaysia’s gross domestic product is expected to rebound by 6.5% to 7.5%, higher than the forecast growth for Asean-5, which is 5.2%.”

He said the country’s exports have been showing signs of recovery since September last year, with positive year-on-year growth.

Higher demand for semiconductors and commodity-based products is anticipated to drive exports as global economic activities recover.

The trade surplus recorded in 2020 marks the fourth consecutive year of double-digit growth, with an expansion of 26.9% to RM184.79 billion from 2019.

It is also the largest trade surplus thus far, representing Malaysia’s achievement in sustaining a surplus for 23 consecutive years.

Total trade in 2020 amounted to RM1.777 trillion, contracting 3.6% from 2019, while imports totalled RM796.19 billion, a decline of 6.3%.

Malaysia’s exports last year, valued at RM980.99 billion, declined marginally by 1.4% from 2019, in tandem with the unfavourable external environment due to the Covid-19 pandemic.

Exports rebounded in the second half of 2020, increasing by 4.8%, a significant improvement from the 7.9% contraction in the first half of the year, as the economy progressively reopened and external demand recovered.

Lower exports were recorded to Thailand, India, Bangladesh, Vietnam and Japan, while higher exports was registered with China, the United States, Singapore and Hong Kong.

“Malaysia’s trade performance was in tandem with countries in the region, notably Indonesia, Singapore, South Korea and Thailand,” said Azmin.

“Trade with existing free trade agreement (FTA) partners in 2020 stood at RM1.185 trillion, registering a decrease of 3.7% and accounting for 66.7% of Malaysia’s total trade.”

He said the recent signing of the Regional Comprehensive Economic Partnership, the biggest FTA in the world, will provide Malaysian companies and businesses access to more than a third of the world market, attract foreign direct investment, and be a boon to the nation’s export growth.

“Going forward, investor confidence has been bolstered by Moody’s latest affirmation of Malaysia’s local and foreign currency long-term issuer ratings at A3, with a stable outlook.

“This is a testament to the government’s strong fiscal discipline and robust medium-term growth prospects, and demonstrates Moody’s confidence in Malaysia as having a strong credit standing.”

While these are challenging times, he said, the government’s priority is to place the nation firmly on the path of economic recovery, particularly with the 12th Malaysia Plan as the blueprint for sustainable growth, founded on sound economic fundamentals and decisive policy measures. – Bernama, January 30, 2021