OCBC Bank: Rising demand for commodities gives Malaysian exports a boost, but imports increasing too
18 Apr 2022
The higher prices and rising demand for commodities due to the Russia-Ukraine war, which has threatened the supply of many key production inputs powering the global economy, have begun to show its effect on global macro data, with the trade numbers of Indonesia and Malaysia showing strong uptrend.
OCBC Bank said Malaysian exports, which came in at 25.4 per cent year-on-year (y-o-y) in March, were “miles north of the 10.4 per cent that the market had expected and ahead of the 16.8 per cent in February.”
“Out-shipment of petroleum products and liquefied natural gas (LNG) were up 96.5 and 100.5 per cent, respectively, even as Malaysia continued to benefit from the semiconductors boom, with electronics and electrical (E&E) shipment at 32.8 per cent y-o-y,” it said in a research note today.
Indonesia’s export growth of 44.36 per cent y-o-y “easily surpassed the market expectation of around 25 per cent growth and bested the February print of 34 per cent uptick,” while mining exports jumped 143.9 per cent in March, bolstered by a surge in demand for commodities such as coal, palm oil, tin, and nickel.
“On the flip side came import surprises too, however. Malaysia’s imports came in close to 30 per cent y-o-y versus 16.4 per cent, while Indonesia’s print was at 30.85 per cent vs an expected 18.5 per cent.
“This is a signal that recoveries are gaining ground in both countries. Still, the price factor featured too, especially for Indonesia, which is a major importer of wheat and soybean, not to mention oil, as well,” it said.
OCBC said the strength of exports helped to cover the effect of rising imports, with trade balances squarely in the surplus territory for both.
“This matters especially for Indonesia, which would be looking to keep its current account deficit as contained as possible to minimise the effect from the tightening of the screw that is the US Federal Reserve rate hike cycle,” it said.