E&E, gas sales help cushion decline in June exports

From the Business times:

MALAYSIA'S exports fell at a slower rate in June, helped by a slower deceleration in the exports of electronic and electrical (E&E) products and a rise in liquefied natural gas (LNG) exports.

Exports in June fell 22.6 per cent year-on-year, beating a 25.47 per cent contraction forecast in the Business Times poll.

Together, E&E and LNG accounted for 46.2 per cent of the overall exports.

Imports also dropped 20.8 per cent from the same month a year ago, while total trade shrank by 21.8 per cent to RM81.09 billion.

The International Trade and Industry Ministry (Miti) said month-on-month, exports rose 5.1 per cent in June to RM45.1 billion from May, while imports rose 9.4 per cent to RM35.99 billion.

Economists said the decline in the country's exports is easing, but improvement is likely to be gradual because exports still register a sharp drop year-on-year.

"The month-on-month trend shows that the contraction in global demand is stabilising, but we are not expecting a V-shape recovery in exports because major developed economies are still in recession in the first half of the year," RAM chief economist Dr Yeah Kim Leng told Business Times yesterday.

"Some are projecting a recovery or slight growth in the US economy in the third quarter, but not a robust recovery," he added.

Yeah said at a 20 per cent contraction, Malaysia's exports are still better than other Asian countries such as Singapore, Japan and China, whose exports have shrunk between 30 per cent and 40 per cent since the onset of the global financial crisis.

MIDF Research head Zulkifli Hamzah said the month-on-month recovery in exports was in line with regional trend, driven by intra-Asian trade.

"The Western economies of US and Europe are still weighed down by weak demand and overcapacity. As Malaysia is an open economy, a meaningful recovery needs to have the participation of the US and Europe," he said.

Zulkifli said while Asia has the capacity to drive demand, probably until the end of the year, the momentum must be supported by the Western economies. Otherwise, the recovery would not be sustainable.

He really means that Malaysia is an export-oriented economy. We probably won't see the export numbers get much worse, but I believe we are getting used to the news that exports are improving only a little bit. It's not really telling us anything new at this point. Reality will sink in that we have a long ways to go and probably won't see the numbers of last year for a very long time.