May's Total Trade down 29%

From the Business Times:

EXPORTS in May fell 29.7 per cent, worse than what was expected, mainly due to the plunge in commodity prices and the continued weak demand for electrical and electronic items worldwide.

Imports sank by 27.8 per cent from the same month a year ago while total trade fell 28.9 per cent.

A Business Times poll had forecast May exports to contract 28.83 per cent, with imports also down by 23.91 per cent.

But exports rose 4.5 per cent in May to RM42.95 billion when compared with April, The International Trade and Industry Ministry said.

What was more worrying was that imports fell by 2.3 per cent to RM32.93 billion from the month before.

"...it suggests that not only is export demand weak, but that firms expect it to remain that way for sometime to come and that domestic demand is also struggling," said Singapore-based IDEAglobal economist Philip McNicholas.

Bank Islam economist Azrul Azwar Ahmad Tajudin said the latest trade numbers confirmed views that the gross domestic product (GDP) for the second quarter will be no different from the first quarter.

GDP shrank by 6.2 per cent in the first quarter.

"Since the current recession is much export-driven, it will take a resounding turnaround in global demand for an export-dependent country like Malaysia to return to positive territory.

"I am cautiously convinced that a a positive GDP growth, albeit marginal (less than 1 per cent), will resume in the fourth quarter of 2009 as the reflationary effects of the two stimulus packages should filter through by then," he said.

Commodity exports may yet remain under pressure for the June and July numbers, said Standard Chartered's Alvin Liew.

"Especially when we note that global oil prices were rallying and peaked at US$147 per barrel in July 2008 before collapsing in the second half.

"This would continue to exert a significant negative base effect on Malaysia's crude oil and crude palm oil exports in June and July, before rapidly disappearing as we go into the second half of the year."

The top five export destinations for the month were Singapore (RM6.17 billion), China (RM4.95 billion), the US (RM4.94 billion), Japan (RM3.46 billion) and Thailand (RM2.40 billion). They accounted for more than half of the total exports.

Exports to the US, Malaysia's biggest export market, which slumped by 39.8 per cent compared to a year ago, showed an improvement in May, with a 7.7 per cent increase versus April.

With trade numbers down 30%, expect something similar to the the -6.2% GDP growth in the first quarter for Q2 GDP. Some economists are looking for 4Q positive growth, but it will be incredibly anemic if there is any. Growth will either be a little bit negative or a little bit positive. Not too sure what everyone is getting excited over.