Slight disappointment is expected for Malaysia's trade data due today

Slight disappointment is expected for Sep15 trade data due today. Export growth is likely to moderate to 2.6% YoY, down from 4.1% in the previous month. Import growth is expected to register an expansion of 2.1%, up from the previous decline of 6.1%. This should bring overall trade balance to MYR 9.6bn, a decline from MYR 10.2bn in the previous month. 

Weak external demand amid the uncertain global environment will take the toll on export performance. A sluggish US recovery, cloudy outlook in the Eurozone and the deceleration in China have all contributed to the global woes and weighed down on external demand. These do not bode well for the export sector and the impact will be manifested in the headline number. 

However, trade figures are all reported in local currency terms. And the ringgit has depreciated significantly against the USD compared to a year ago. Such drastic depreciation in the local currency has essentially provided the valuation lift to the headline trade figures. That is, if not for such valuation effect, export growth will very likely be negative.