Malaysia's exports should remain resilient on the back of the weak currency

Malaysia's exports should remain resilient on the back of the weak currency. Trade data for October is due today and the headline export growth is expected to register an expansion of 9.0% YoY, marginally better than an already strong pace of 8.8% in the previous month. In contrast, imports are likely to contract by 4.4%, which will thus bring about a trade surplus of MYR 9.8bn. 

Weak external demand amid the uncertain global environment will take the toll on export performance. A sluggish US recovery, cloudy outlook in the Eurozone and the deceleration in China have all contributed to the global woes and weighed down on external demand. However, the ringgit has depreciated by about 30% against the USD compared to a year ago. 

The weaker currency has helped to boost export competitiveness and suppress import demand. That said, such drastic depreciation in the local currency has also injected significant valuation effects to the headline figures given that the trade figures are all reported in local currency terms.