Malaysia’s Exports in 2023 Contract as Global Economic Environment Remains Challenging

KUALA LUMPUR – Malaysia faced a difficult end to 2023 as its exports contracted significantly in the final month of the year. This decline can be attributed to the challenging global economic environment, as well as weak commodity prices that have impacted the Southeast Asian country.

According to the Ministry of Investment, Trade, and Industry, Malaysia’s exports dropped by 10% in December compared to the previous year. In contrast, imports experienced a slight increase of 2.9% during the same period. As a result, Malaysia recorded a trade surplus of 11.8 billion ringgit ($2.50 billion), slightly lower than November’s surplus of MYR12.41 billion.

Looking at the full year, Malaysia’s exports slid by 8.0%, while imports fell by 6.4%. The trade surplus also decreased by 16.4% to MYR214.10 billion. Several factors contributed to this decline, including lower commodity prices, geopolitical tensions, inflation, and a downturn in the semiconductor sector.

Notably, the December figures fell short of economists’ expectations, as they had predicted a 3.7% decrease in exports for the month.

Muhammad Saifuddin Bin Sapuan, an economist at Malaysian investment bank Kenanga, believes that these subdued trade numbers are consistent with the weakness in the manufacturing sector and the overall softening of global trade activity during the month.

Despite the current challenges, there may be brighter days ahead for Malaysia’s economy, especially given its focus on trade.

Trade Performance Expectations in Malaysia

According to the ministry, Malaysia’s trade performance is anticipated to recover in 2024, driven by the projected rebound in global trade. This positive outlook is reinforced by Ram Ratings’ head and senior economist Woon Khai Jhek, who believes that a gradual recovery is underway. He attributes this recovery to the bottoming out of the downturns in global trade and the semiconductor cycle. Notably, Jhek is optimistic about the export momentum, considering it “encouraging.” He also anticipates a rebound in import growth, aided by the low base effects.

Potential Risks

Although the ministry remains optimistic about the country’s trade outlook, they have identified several risks that may hinder a complete recovery. Prolonged geopolitical tensions, uncertainties surrounding commodity prices, and potential political changes in major trading partners are among the factors that could potentially impact Malaysia’s trade performance.

December Trade Figures

In December, Malaysia’s trade with its five largest export and import trading partners is as follows:

Exports Value (MYR Millions) % Change YoY

  • Total: 118,452.9 (+10%)
  • China: 17,657.0 (-1.5%)
  • Singapore: 15,644.3 (-24.8%)
  • USA: 14,659.5 (-5.1%)
  • Japan: 7,545.3 (-4.7%)
  • Hong Kong: 7,347.8 (-9.1%)

Imports Value (MYR Millions) % Change YoY

  • Total: 106,656.7 (+2.9%)
  • China: 23,171.9 (-3.5%)
  • Singapore: 11,897.8 (+11.8%)
  • USA: 8,561.7 (+21.5%)
  • Taiwan: 8,090.5 (+1.1%)
  • Japan: 5,796.3 (-13.4%)

It is important to note that these figures reflect the trade performance of Malaysia with its major trading partners.

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