MYR slowdown on LNG and GST likely to hurt exports and consumer spending

Lower energy prices (particularly LNG) and the 6% GST (since 1 April) will likely hurt exports and consumer spending. April exports data are showing the first signs of a severe LNG impact, as LNG prices track crude oil prices with a 4-6 month lag.

LNG exports recorded a sharp 40.1% contraction in April. Trade and current account balances are seen being pressured lower going forward, on a much weaker export outlook.

Investment spending will also likely moderate as the oil and gas price shock and tighter fiscal finances delay projects.