Malaysia's Export Growth Unexpectedly Accelerates

By Stephanie Phang and Manirajan Ramasamy

Nov. 5 (Bloomberg) -- Malaysia's export growth unexpectedly accelerated in September, as rising commodities shipments to Asian markets countered declining electronics sales to the U.S.

Overseas sales increased 15.1 percent from a year earlier to 62.3 billion ringgit ($17.7 billion) after gaining a revised 10.7 percent in August, the trade ministry said in a statement in Kuala Lumpur today. The median estimate in a Bloomberg News survey of 12 economists had been for a 6.6 percent gain.

``Companies exporting to the regional markets of Asia expect demand to remain buoyant as countries in the region continue to invest in the industrial sector,'' Trade Minister Muhyiddin Yassin told reporters in Kuala Lumpur today. Electronics sales to the U.S. and Europe are expected to soften in early 2009 after ``marginal'' export growth in the fourth quarter to meet year-end holiday demand, he said.

Malaysia's government announced measures yesterday to bolster domestic demand as it predicted faltering exports would drag growth to an eight-year low in 2009. The Southeast Asian nation joins countries from Germany to South Korea in trying to limit the impact of a deepening global economic slowdown that's already pushed neighboring Singapore into recession.

The pick up in exports was probably ``a temporary interruption to what should be a slowing trend during the next few quarters,'' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore.

Demand Wanes

Manufacturing in the U.S., Malaysia's largest overseas market last year, contracted at the fastest pace in 26 years last month, according to the Institute for Supply Management's factory index. The European Commission said this week the region's economy probably entered a recession in the third quarter and will barely grow next year.

``Slowing growth in major trading partners has meant demand has waned,'' said Nikhilesh Bhattacharyya, an economist in Sydney at Moody's Economy.com. ``Sagging demand for manufactured goods and sharp declines in commodity prices'' hurt overseas sales in September.

Exports to the U.S. dropped 15.3 percent to 7.37 billion ringgit in September from a year earlier because of a decline in electrical and electronics shipments, the ministry said today. The U.S. has fallen behind Singapore in the first nine months of the year as Malaysia's largest overseas market.

Sales to Southeast Asia rose 15 percent to 15.8 billion ringgit, helped by higher exports of crude oil, refined petroleum products and electronics. Shipments to China, Japan and India were also lifted by commodities.

Profit Declines

Shipments of electrical and electronics goods, which made up 40 percent of total exports in September, gained 3 percent after declining the month before. Malaysian Pacific Industries Bhd. and Unisem Bhd., the country's two largest publicly traded semiconductor assemblers, both posted profit declines in the three months to June.

Crude oil exports jumped 57 percent and palm oil sales increased 32 percent in September even as prices eased after reaching records earlier this year. Malaysia is Southeast Asia's second-largest oil and gas producer and the world's No. 2 palm oil seller.

Malaysia's government yesterday cut the country's 2009 economic growth forecast to 3.5 percent from 5.4 percent, announced public projects worth about $2 billion and said it will allow workers to pay less of their monthly incomes into a national pension fund to spur spending. It predicted exports would drop 1.5 percent next year.

Imports climbed 11.9 percent in September to 47.8 billion ringgit, leaving a trade surplus of 14.5 billion ringgit. Exports grew 16.9 percent in the third quarter, while imports expanded 10.3 percent.

To contact the reporter on this story: Stephanie Phang Singapore at sphang@bloomberg.net; Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net