Malaysian Exports Increase at Fastest Pace Since 2004

By Shamim Adam and Michael Munoz

Sept. 4 (Bloomberg) -- Malaysia's exports unexpectedly rose at the fastest pace in almost four years in July as companies increased shipments of electronics goods and commodities.

Overseas sales increased 25.4 percent from a year earlier to 63.4 billion ringgit ($18.5 billion), after climbing a revised 18.6 percent in June, the Trade Ministry said in a statement in Kuala Lumpur today. That exceeded the 15.4 percent median estimate and all 14 forecasts in a Bloomberg News survey.

Commodities have held up Malaysian exports, prompting the government to forecast 2008 growth will be 5.7 percent, higher than most economists' estimates. The central bank has kept interest rates unchanged this year to avoid a deeper slowdown after the Southeast Asian economy grew at the slowest pace in a year last quarter on easing manufacturing and domestic spending.

``The strong demand for electronics and commodities was a boost to exports,'' said Lee Heng Guie, an economist at CIMB Investment Bank Bhd. in Kuala Lumpur. ``We don't think it will continue and exports will come off significantly from this level, especially in the fourth quarter. The U.S. slowdown will continue to be a drag.''

Shipments to the U.S. rose 1.9 percent to 7.77 billion ringgit in July from a year earlier on higher sales of palm oil and optical equipment, the trade ministry said. Sales to the European Union jumped 6.6 percent, while exports to China surged 74.1 percent amid an increase in shipments of electrical and electronics goods and crude petroleum.

Palm Oil

Exports of palm oil jumped 77 percent in July from a year earlier, and gained 21 percent from June. Sales of crude oil climbed 58.8 percent from a year ago, while shipments of liquefied natural gas rose 33.4 percent.

Exports may weaken in the coming months as prices of crude and palm oil ease. Malaysia is Southeast Asia's second-largest oil and gas producer and the world's No. 2 palm oil seller.

Palm oil has tumbled 45 percent from a record 4,486 ringgit on March 4 amid concerns that global supply may exceed demand. Global crude prices are about 26 percent lower than the record $147.27 a barrel on July 11.

``Global growth is projected to weaken further with a more protracted slowdown in a number of the developed economies and some moderation in growth in the emerging economies,'' the central bank said last week. ``The domestic economy will be affected by these external developments.''

Sales of Unisem Bhd. semiconductors and other electrical and electronics goods rose 12.9 percent from a year earlier, the biggest gain this year. Such goods accounted for more than a third of total exports in July.

Imports climbed 14.8 percent in July, leaving a trade surplus of 14.51 billion ringgit.

Exports increased 17 percent in the first seven months from a year earlier. Imports rose 9.4 percent in the same period, leaving a trade surplus of 82 billion ringgit.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net