Malaysia’s external trade activities is expected to expand steadily beyond 2023 amid the impact of new trade agreements, apart from elevated commodity prices and lower interest rates, said MIDF Research.
It said the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) were also expected to elevate the external trade performances in 2024.
“In the post-pandemic era, Malaysia has ratified the RCEP and CPTPP, which came into force on March 18, 2022, and Nov 29, 2022, respectively.
“As of 2022, RCEP members contributed 58.1% of Malaysia’s total trade while CPTPP members sponsored 27.5%,” the research house said in a note today.
Having these two free trade agreements (FTAs), it said Malaysian products are able to penetrate into wider markets and enjoy cheaper imported goods. Hence, Malaysia’s exports and imports growth rates would touch +12.1% and +10.9% respectively in 2024, it added.
MIDF Research said the external front is still on a challenging path, with concerns of a global economic slowdown, inflation biting, tightening monetary policy in many countries and geopolitical risks in Europe and Asia.
“We foresee slight moderation in exports growth forecast from +25% year-on-year (y-o-y) in 2022 to +9.2% y-o-y in 2023.”
On the bright side, it said China’s reopening provides a silver lining for global trade flows. “Malaysia’s exports market can still hold among others underpinned by overseas sales of commodity products with commodity prices remaining elevated, crude palm oil at RM3,500 per tonne and Brent crude oil at US$94 per barrel for 2023,” it said.
As for imports, it is forecast to touch +9.5 % y-o-y, higher than exports as the research house views domestic demand to stay sturdy.
On the plantation sector, MIDF Research anticipated the palm oil supply tightness situation would likely ease in 2023 on better weather conditions aided by recovery in a foreign labour shortage in the second half of this year. It maintained a ‘neutral’ stance on the plantation sector.
Meanwhile, it reiterated a ‘positive’ call for the oil and gas sector, despite an estimated average price for Brent crude in 2023 to reach US$92 per barrel, as compared to US$98 per barrel last year, emphasising the risks and uncertainties from Russian oil and gas sanctions, US productions and China’s long-term demand.
“We also maintain a favourable outlook on the semiconductor sector in 2023 due to its ongoing growth potential driven by advanced technologies and we believe the recent decline in the tech sector has been overstated, offering opportunities for forward-looking investors to invest in growth stocks,” it said.
Source: FMT
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<p>Time: 2024 By: Ministry of Industry and Trade</p>
