Malaysia’s May exports plunge 29.7pc

(Business Times) – Malaysia’s exports slumped 29.7 per cent in May from a year earlier, hitting their lowest level since 2001 with demand evaporating, according to official data released today.

The trade ministry said in a statement that exports plunged to RM42.95 billion (US$12.19 billion) year-on-year while imports fell 27.8 per cent.

Total trade from January to May was worth RM360.78 billion, a decrease of 25.3 per cent from a year earlier, but Malaysia did manage to record a trade surplus of RM10.02 billion for May.

Yeah Kim Leng, chief economist at ratings agency RAM Holdings, said the sharp contraction was the worst for Malaysia since the dot com bubble burst in 2001. “This is worse than expected given that we were expecting some improvements,” he said, noting that export figures, however, improved slightly by 4.5 per cent month-on-month from April.

“What we can infer from this is the stabilisation in global demand will only be reflected in Malaysia’s export performance in the third quarter,” he added.

The trade ministry said the steep decline in exports was mostly due to lower demand from key trading partners, especially for electrical and electronic products which account for one-third of Malaysia’s total exports.

Malaysia’s key exports markets are Singapore, China, Japan, Thailand and the United States.

In April, Malaysian exports fell 26.3 per cent.

The government has said the export-dependent economy is likely to contract by 4.0-5.0 per cent this year due to the drop-off in exports and manufacturing.

Foreign investment has also seen a big dip this year. Trade Minister Mustapa Mohamed said yesterday that foreign direct investment for the first five months stood at RM4.2 billion compared with RM46 billion in 2008.