Malaysian Export Growth Accelerates to Fastest Pace Since 2004

Malaysian Export Growth Accelerates to Fastest Pace Since 2004
By Shamim Adam and Michael Munoz

July 4 (Bloomberg) -- Malaysia's export growth accelerated in May to the fastest pace in more than three years as producers of palm oil and other commodities increased shipments to customers abroad and electronics sales recovered.
Overseas sales rose 22 percent from a year earlier to a record 60.6 billion ringgit ($18.6 billion), the Trade Ministry said in Kuala Lumpur today. The gain exceeded all forecasts in a Bloomberg survey of 17 economists where the median estimate was for a 12.5 percent increase.

Malaysia, Southeast Asia's second-largest oil and gas producer and the world's No. 2 palm oil seller, is benefiting from surging prices for energy and other commodities. Crude oil in New York reached a record $145.85 a barrel yesterday, while palm oil produced by Sime Darby Bhd. and other Malaysian planters is over a third higher from a year ago.

``Export growth is still relatively robust, thanks largely to the boost coming from commodities,'' said Irvin Seah, an economist at DBS Group Holdings Ltd. in Singapore. ``Commodities will remain the key driver for overall export performance.''

Exports of palm oil jumped 78.9 percent from a year earlier and gained 0.8 percent from the previous month. Sales of crude oil climbed 62 percent, and shipments of liquefied natural gas rose 20.3 percent.

Sales of made-in-Malaysia Intel chips and other electrical and electronics goods, which made up 40.4 percent of total exports in May, rose 10.5 percent from a year earlier, gaining for a second month.

Export Growth

Still, the government yesterday lowered its forecast for export growth this year, pointing to a slowdown in the U.S., its largest overseas market, and the impact on the global economy. U.S. electronics makers in Malaysia, including Intel Corp. and Motorola Inc., expect export sales to grow at a slower pace this year, an industry group said this week.

Exports may expand 6 percent this year, lower than a prediction of 7 percent made by the government in February, Trade and Industry Minister Muhyiddin Yassin said yesterday.

Exports to the U.S. fell 1.4 percent to 7.81 billion ringgit, contracting for the 14th time in 15 months. The U.S. economy has lost jobs for six consecutive months and Treasury Secretary Henry Paulson yesterday said he is more concerned about a ``downturn'' in growth than faster inflation.

Malaysia's central bank has lowered its estimates for the economy's expansion this year. Bank Negara Malaysia Governor Zeti Akhtar Aziz said last month preliminary estimates show that the $151 billion economy may grow about 5 percent in 2008, from a March forecast of 5 percent to 6 percent.

Exports in May were also bolstered by increased shipments to Japan, China and Hong Kong. Imports expanded 7.9 percent in May, leaving a trade surplus of 15.6 billion ringgit. Exports increased 14.6 percent in the first five months from a year earlier. Imports rose 7.2 percent in the same period, leaving a trade surplus of 54.7 billion ringgit.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net
Last Updated: July 4, 2008 00:01 EDT
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