Malaysian exports likely to expand in June, oil prices to extend support

Malaysian exports in the month of June are likely to expand on strong support from petroleum and electronics products. Also, recovery in global oil prices has created strong valuation effects that will likely bolster the country’s export performance.

Malaysia’s headline inflation is expected to register an expansion of 2.1 percent, up from 1.6 percent in the previous month, DBS reported. However, Imports are expected to shrink by 2.9 percent. This will thus deliver a trade surplus of MYR 8.3 billion, down from MYR 9.1 billion in the previous month.

While the expansion in exports is relatively benign compared to historical environment, the expectations are not that narrow, given the recent turmoil that is threatening the global economy. Sluggish growth in the developed economies and the slowdown in China made for weak export demand. Any uptick is a bonus given the existing economic conditions.

"Import growth will remain weak as domestic consumption is weighed down by the softer labor market," DBS commented in its recent research report.

Meanwhile, growth in consumption is expected to remain lackluster, which shall weigh on import growth in the coming months.