Malaysia's trade rebound hinges on global stability - Analysts

Analysts forecast double-digit export growth for Malaysia

19 Mar 2024 06:30pm
Pix for illustration purpose only. - FILE PIX
Pix for illustration purpose only. - FILE PIX

KUALA LUMPUR - Malaysia's trade performance in 2024 is expected to experience a strong rebound, propelled by the projected upturn in global trade and the promising outlook for the global semiconductor industry, according to analysts.

In a research note today, Public Investment Bank Bhd anticipated Malaysia’s trade to improve this year, supported by the expected global trade recovery and brighter prospects in electronics exports amid the tech cycle recovery.

"Consequently, we forecast Malaysia's goods and services exports to rebound by 5.4 per cent in 2024, with imports growing at 6.8 per cent, though this is subject to revision if global conditions deteriorate,” it said.

Furthermore, it said the country's reliance on the economic fortunes of major players such as the United States, China, and the European Union would pose risks to Asean trade.

Similarly, Kenanga Research has retained its forecast of Malaysia’s export growth this year at 9.4 per cent (2023: -8.0 per cent) on an expected turnaround in the electrical and electronics (E&E) exports and a demand recovery from China, particularly in the second half of 2024.

It said export growth would gradually improve in the coming months, with a likely double-digit expansion by year-end, driven by a tech sector upturn and China's steady economic rebound, underpinned by the ongoing government stimulus.

"However, we maintain a cautious outlook due to potential disruptions from rising geopolitical tensions that could disrupt the global supply chain and trade activities.

"A slower-than-expected recovery in China may also cap the growth potential, particularly in the export-oriented sector,” it said in a separate note.

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The research firm also expected a recovery in the manufacturing export-oriented sector, alongside domestic demand growth driven by a lower unemployment rate and improving household income.

"Thus, our gross domestic product growth forecast for 2024 remains at 4.5-5.0 per cent (2023: 3.7 per cent),” it said.

Meanwhile, Maybank Investment Bank Bhd said that for this year, it expected exports and imports to rebound by 4.7 per cent and 5.6 per cent, respectively.

"A major driver for the projected exports rebound this year is the turnaround prospect in the electronics cycle, as World Semiconductor Trade Statistics expects global semiconductor sales to rebound by 13.1 percent in 2024,” it said in a separate note.

Although E&E exports are still down year-to-date, it said the Malaysia Semiconductor Industry Association expected the industry to rebound in the second half of 2024. - BERNAMA