Malaysian imports just slumped by the most in a decade

(Bloomberg) – Malaysian imports fell by the most since 2009 in August as demand for capital goods waned, suggesting the nation’s economic growth will cool in the months ahead.

Imports slid 12.5% in August from a year ago, trailing the 8% drop forecast by economists in a Bloomberg survey, according to official data released Friday. Exports shrank 0.8%, missing analysts’ estimates for a 2.7% gain.

The data could signal that the U.S.-China trade war is taking a mounting toll on Malaysia’s economy. Second-quarter growth accelerated to 4.9% from a year earlier, the quickest pace in more than a year, but economists have warned that rising global risks will weigh on exports and consumption for the rest of the year.

Key Insights

• Imports of capital goods, a barometer of economic activity, slumped 31% in August, due to lower purchases of machinery parts and mechanical appliances. Imports of consumption goods fell 12.8%
• Agriculture exports climbed 13%, led by palm oil as China doubled its purchases of the commodity
• Malaysia is expected to unveil an expansionary budget on Oct 11 to counter the fallout from the trade war, with growth forecast to slow to 4.3% in 2020 from a projected 4.5% this year