Malaysia's exports in April shrank by 26.3 percent from a year ago, falling considerably more than the 22 percent expected and economists said that a significant improvement will only take place in the second half. Exports fell to 41.12 billion ringgit ($11.77 billion) in April on an annual basis, the government said Thursday.
Only a relatively smaller fall in exports to China at 9.4 percent prevented a worse outcome, while electronics exports, the mainstay of Malaysia's economy dropped by 23.2 percent from a year earlier.
"This number is a bit disappointing. There should be an improvement in the second half. The question is how fast it improves and nobody expects the improvement will be in a straight line," said Kit Wei Zheng at Citibank. Economists said the sharp decline in April exports was largely due to a high base from strong commodity prices last year.
"It also reflects continued contraction in external demand, especially in the US, where they are still building precautionary savings, resulting in reduced spendings," said Lee Heng Guie, chief economist at CIMB Investment Bank.
"Although we have seen some signs of stabilisation in the global economy, and firm commodity prices, we will still not be able to escape double-digit declines in exports going into the third quarter. We may see single-digit declines in the fourth quarter. In summary, exports will contract 20-25 percent for the full year. It was definitely a weak start to the second quarter."
Malaysia is Asia's third most trade dependent economy after Hong Kong and Singapore relative to the size of its economy and the April trade data after surprisingly muted falls in recent months showed the country was finally catching the full force of the global economic downturn.
"This kind of deterioration in the trade position is something we have been expecting for months and had almost given up hope of seeing. It is a key reason why our foreign exchange analysts are relatively bearish of the ringgit," said Robert Prior-Wandesforde an economist at HSBC. South Korea reported earlier this week its May exports fell 28.3 percent compared to expectations of a 23.2 percent drop.
Malaysia's imports in April were down 22.4 percent from a year earlier to 33.76 billion Malaysian ringgit compared to a forecast of a 27.4 percent decline. The trade balance showed a surplus of 7.36 billion ringgit against economists' projection of 12.1 billion ringgit.
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