Trade surplus falls sharply in October
Malaysiakini.com
Dec 4, 2006

The country's trade surplus fell sharply in October, declining 8.23 percent to RM9.4 billion from September due to the festive period and slower exports to the US.

Exports in October contracted by 3.4 percent year-on-year to RM48.03 billion while imports fell 1.45 percent to RM38.64 billion, the trade ministry said today.

The ministry also said exports in October fell 9.6 percent compared to September, while imports were down by 9.9 percent, "due to less working days as a result of festivities".

October saw consecutive celebrations for the Hindu Deepavali and Muslim Eid al-Fitr festivals, producing a long stretch of holidays.

Exports to the US fell to RM9.07 billion from RM9.87 billion in September, with lower shipments of crude petroleum, wood and electronic products.

The US is the single largest market for Malaysian goods, with exports to the country accounting for 18.88 percent of total exports in October.

Economists said the slowdown in exports was sharper than anticipated.

"(Slower growth) was anticipated but (the contraction) came as a surprise," said Yeah Kim Leng, chief economist at RAM Consultancy Services.

Impact of stronger ringgit

He said a strengthening ringgit, which was depegged from the US dollar last year, could have had an impact on export growth, but it was not expected to be large enough to cause a big fall.

The ringgit is currently traded at 3.5870 to the dollar, up from its previously pegged value of 3.80.

Exports of electrical and electronic products accounted for nearly 49 percent of Malaysia's total exports in October, and TA Securities economic analyst Wong Lai Yee also flagged a slowdown in the semi-conductor industry.

"Going forward, growth is expected continue to slow due to a projected softer global semiconductor industry," said Wong.

Economists said export growth in the final two months of the year would be crucial to determining if Malaysia can weather the impact of expected softer US economic growth.

The trade ministry said that for the first 10 months of 2006, exports rose 10 percent year-on-year to RM485 billion while imports expanded 10.7 percent to RM397.59 billion, resulting in a trade surplus of RM87.41 billion.

Copyright © 1999-2006 Mkini Dotcom Sdn Bhd