KUALA LUMPUR - RHB Research has maintained its view that trade momentum is likely to show an acceleration in the second half of 2023 (2H 2023), with the third quarter (3Q) being the commencement of the recovery process.
Nevertheless, the year-on-year export growth might remain in negative territory in 3Q 2023 on high base effects over the same period last year, it said in a note today.
"We opined that the United States (US) and global growth are on the cusp of a recovery. In our view, green shoots in the US and in Asia ex-Japan are already evident and these will turn into trees within the next two months.
"We are already noticing early signs of a bottoming-out process in trade, industrial production, retail sales, and purchasing managers index (PMI) data in many major economies in Asia ex-Japan. The gradual recovery in global growth is likely to lend some support to Malaysia’s trade performance," it said.
The export and import momentum in both nominal and real terms slowed for the month of June, following the normalisation of trade activities post Raya holidays, it said.
Meanwhile, given the weaker performance in 1H 2023, MIDF Research has maintained its projection that Malaysia’s exports and imports will decline by -3.4 and -1.9 per cent respectively this year.
"Once again, turnaround in electrical and electronic (E&E) exports and the global manufacturing sector could be positive factors to support trade outlook in 2H 2023, apart from a much delayed boost from China’s recovery.
"On the other hand, we opine the anticipated slowdown in global demand, particularly from developed markets like the US and European countries, will keep the trade outlook less encouraging than last year," it said.
Moreover, it said other downside risks could also derail trade outlook which include worsening of geopolitical and trade tensions, weaker recovery in China, persistently high inflation and consequently sharper-than-expected contraction in global growth.
"While external slowdown will be a drag to economic growth, we are sanguine that increased domestic spending and sustained growth on the domestic front will be the main growth driver this year,” it said. - Bernama