Double-digit export growth to continue in coming months: Economist

PETALING JAYA: The double-digit growth in exports is expected to continue in the coming months but is unlikely to top the 32.5% year-on-year growth recorded in May, said Sunway University Business School Professor of Economics Dr Yeah Kim Leng.
He said global demand is expected to remain strong over the next three to six months, thus leading to double-digit growth in the coming months but he does not expect the growth to be as strong as in May as industrial capacity utilisation is almost at its peak.
“I expect exports to continue growing but it will moderate in the coming months. Strong demand from overseas will continue to support exports growth,” he told SunBiz.
Last Friday, the Statistics Department reported a 32.5% year-on-year growth in exports to RM79.4 billion in May, reflecting six months of double-digit growth.
Total trade stood at RM153.3 billion, 31.5% higher than the same month a year ago, also supported by a 30.4% growth in imports to RM56.7 billion.
The trade surplus rose 67.3% to RM5.5 billion in May from RM3.3 billion a year ago. However, on a month-on-month basis, it fell RM3.2 billion or 36.5%.
For the second half of the year (2H17), Yeah said some risks in the global environment remain although they have dissipated considerably, given the growth in major economies, especially in China.
“The risks have dissipated largely due to the sustained performances of countries like China, the US, Japan and even Europe. This has reduced some of the concerns on global risks,” he added.
For 2H17, Yeah said, focus will be more on the domestic economy and the strong growth momentum in 1H17 is expected to carry through to 2H17.
“For the domestic economy, the major risk will likely be centred on the coming elections, which may dampen consumer and investor sentiments. However, with the current expansionary mode driven by both external and domestic demand, the growth momentum is not likely to be derailed,” he said.
Although the growth momentum is able to absorb some of the uncertainties, all eyes will be on investor confidence during the run-up to the elections.
“There could be a pause, but I would not be overly concerned. There could also be some concerns over slowdown in household spending but, so far, indicators are showing an improving trend and we are likely to achieve our gross domestic product forecast,” said Yeah.
He said foreign investments are still strong although lower than 2014 and 2015 levels. He expects gradual improvement this year, with by strong investments in infrastructure and construction.