Malaysia: Lower oil prices’ impact on the trade balance

Malaysia's trade surplus was manageable in May and exports fell. The softness in trade is a direct result of lower crude prices and their impact on LNG prices, a dynamic that is starting to feed through to exports. 

Q2 is seen as the quarter in which lower oil prices' impact on the trade balance is likely to be fully factored in. In terms of markets, export demand from China improved at the margin, but demand from the US weakened. Shipments to Japan were also sharply lower, largely owing to lower LNG export value.

"The lack of significant deterioration in trade balance will help reduce concerns of a current account deficit for 2015. A lower current account surplus in 2015 is expected, but it is likely to remain firmly in a surplus territory.Also, lower 2015 GDP growth of 4.5% is expected", says Barclays.