Barclays: Malaysian exports likely to be under pressure from lower energy prices

Quotes from Barclays

• Malaysia's trade surplus remained high in January, at MYR9bn.
• Exports fell 0.6% y/y, considerably below consensus (+2.5%) but better than our forecast (-2.5%). This decline was largely due to the lower value of energy and palm oil exports, which were affected by the recent floods in Eastern and Peninsular Malaysia.
  
  
• Imports also turned negative (-5.3% y/y), driven by lower intermediate imports (consensus: +1.5%).
  
  
• We expect exports to be under pressure from lower energy prices.
• Even if volume growth remains stable, the resetting of LNG prices, coupled with disruption in palm oil supplies, could keep export growth low and lead to lower trade surpluses in 2015. 
  
  
• We believe this weakness could be mitigated somewhat by stronger manufacturing exports, as indicated by the ongoing improvement in electronic shipments, which rose 6.0% y/y in January. In terms of regions, export demand from the US remains high but shipments to China continue to be weak.
  
  
• We think today's large trade surplus should ease market concerns further about the possibility that Malaysia will post a current account deficit, although the external balance faces continued headwinds from declining commodity prices. 
  
  
• We continue to forecast a marked reduction in current account surplus in 2015 relative to 2014; we expect the surplus to decline to 2.0% of GDP, from 4.6% in 2014.
• We also forecast lower 2015 GDP growth at 4.5%, from 6.0% in 2014.