Thursday November 08 2018
Malaysia Keeps Monetary Policy Steady
Central Bank of Malaysia l Chusnul Ch Manan | chusnul@tradingeconomics.com

The Central Bank of Malaysia kept its benchmark interest rate unchanged at 3.25 percent on November 8th, 2018, as widely expected. Policymakers said the economy maintains its underlying fundamental strength, with steady economic growth, low unemployment and a current account surplus. Private consumption will remain the main driver of growth, but the domestic economy continues to face downside risks stemming from any further escalation in trade tensions and prolonged weakness in the mining and agriculture sectors.

Statement by the Bank Negara Malaysia:

The global economic expansion continues, although with signs of moderating momentum. In the advanced economies, growth will continue to be mainly driven by positive labour market conditions and policy support. Growth in Asia will be supported by domestic activity amid weaker external demand. Risks to the global growth outlook remain tilted to the downside, with trade tensions continuing to be a key source of downside risk. Continued volatility in international financial markets and monetary policy normalisation in some advanced economies could lead to further capital outflows and financial market adjustments in emerging economies.

For the Malaysian economy, latest indicators point towards continued expansion in private sector activity. Private consumption will remain the main driver of growth, supported by conducive labour market conditions. Investment activity is projected to be sustained by continued capacity expansion in key sectors, driven by positive demand and efforts to enhance automation. Public sector spending, however, is likely to weigh on growth, amid continued reprioritisation of expenditure by the Government. The recent announcements by the Government have provided more clarity on fiscal and economic development policies. On the external front, exports are projected to provide an additional lift to growth, albeit to a lesser extent, due to moderating global growth momentum. The domestic economy continues to face downside risks stemming from any further escalation in trade tensions and prolonged weakness in the mining and agriculture sectors. Nevertheless, on balance, the Malaysian economy is expected to remain on a steady growth path in 2018 and 2019. 

The annual average headline inflation will be low in 2018. Moving into 2019, headline inflation is projected to increase primarily due to higher projected global oil prices and the floating of domestic fuel prices. While the impact of the consumption tax policy will contribute to higher headline inflation in 2019, it will lapse towards the end of 2019. Underlying inflation is expected to remain contained in the absence of strong demand pressures.

In line with regional economies, the domestic financial markets continue to experience non-resident portfolio outflows due to global developments. Nevertheless, the financial markets remain orderly with domestic monetary and financial conditions supportive of economic growth. The financial sector is sound, with financial institutions operating with strong capital and liquidity buffers. Importantly, the domestic economy maintains its underlying fundamental strength, with steady economic growth, low unemployment and surplus in the current account of the balance of payments. Bank Negara Malaysia’s monetary operations will continue to ensure sufficient liquidity to support the orderly functioning of money and foreign exchange markets and intermediation activity.
At the current level of the OPR, the degree of monetary accommodativeness is consistent with the intended policy stance. The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.




Monday November 05 2018
Malaysia Trade Surplus Largest in a Decade
Statistics Malaysia l Rida | rida@tradingeconomics.com

Malaysia's trade surplus widened sharply to MYR 15.3 billion in September of 2018 from MYR 8.2 billion in the same month of the prior year and easily beating market expectations of a surplus of MYR 7.3 billion. It was the largest trade surplus since September 2008, as exports rebounded while imports shrank unexpectedly.

Year-on-year, exports rose by 6.7 percent to MYR to MYR 83.1 billion in September 2018, after a 0.3 percent fall in August and slightly above market consensus of a 6.5 percent rise. Sales increased for:  electrical & electronic products (6.5  percent to MYR 32.9 billion, 39.6 percent of total exports); refined petroleum products (20.5 percent to MYR 5.7 billion, 6.8 percent share); crude petroleum (54.5 percent to MYR 2.7 billion, 3.2 percent share); and liquefied natural gas/LNG (1.8 percent to MYR 3.1 billion, 3.8 percent share). In contrast, outbound shipments fell for: palm oil and palm oil-based products (-11.5 percent to MYR 5.6 billion; 6.7 percent of total share);  timber and timber-based products (-0.4 percent to 1.8 billion, 2.1 percent of total share); and natural rubber (-1.9 percent to MYR 306. million, 0.4 percent of total share).

Outbound shipments went up to Singapore (8.7 percent); the US (0.1 percent); and  Hong Kong (48.7 percent), while declined to China (-0.6 percent); and Japan (-10.6 percent).

Imports  fell unexpectedly by 2.7 percent from a year earlier to MYR 67.8 billion,  missing expectations of a 9.8 percent gain and after a 11.2 percent growth in a month earlier.  Purchases of intermediate goods dropped 9.3 percent to MYR 35.8 billion, consisting of 52.8 percent of total imports. The decrease was driven by parts & accessories of capital goods, except transport equipment (-24.1 percent); fuel & lubricants, processed, others (-44.8 percent); and fuel & lubricants, primary (-11.5 percent). Also, imports of capital goods shrank 25.2 percent to MYR 7.3 billion, consisting of 10.7 percent share, due to a drop in both transport equipment, industrial (-86 percent) and capital goods except transport equipment (-13.9 percent). In addition, purchases of consumption goods recorded a 10 percent drop to MYR 573.8 million, consisting of 7.6 percent share. The fall was mainly attributed to semi-durables (-31.4 percent); food & beverages, processed, mainly for household consumption (-6.2 percent) and durables (-12.7 percent).

Considering the first nine months of the year, the trade surplus increased to MYR 85.7 billion from MYR 71.2 billion in the same period 2017. 




Friday October 26 2018
Malaysia Inflation Rate Edges Higher to 0.3% in September
Statistics Malaysia l Rida | rida@tradingeconomics.com

Malaysia's consumer price inflation inched up to 0.3 percent year-on-year in September of 2018 from a 3-1/2-year low of 0.2 percent in the previous month and below market expectations of 0.8 percent. Prices were slightly higher for food and housing & utilities.

Year-on-year, prices advanced faster for food & non-alcoholic beverages (0.5 percent vs 0.4 percent in August); housing, water, electricity, gas, & other fuels (2.1 percent vs  2 percent); and restaurants and hotels (1.1 percent vs 0.7 percent). In addition, cost fell at a softer pace for recreation services & culture (-0.2 percent vs -2.2 percent); communication (-1.6 percent vs -4.0 percent); furnishings, household equipment & routine maintenance (-0.8 percent vs -1.7 percent); and alcoholic beverages & tobacco (-0.9 percent vs -1.0 percent). On the other hand, prices slowed for transport (0.3 percent vs 2.1 percent) and continued to decline for miscellaneous goods & services (-3 percent, the same as in August)and clothing and footwear (-3.2 percent vs -2.9 percent). Also, cost of health dropped 0.2 percent, after a flat reading in a month earlier and inflation was steady for education (at 1.1 percent). 

Core consumer prices increased 0.3 percent year-on-year in September, compared to a 0.2 percent fall in August and reaching the first rise in three months.

On a monthly basis, consumer prices went up 0.4 percent, after a 0.2 percent rise in the preceding month. It was the highest monthly figure since November 2017.




Friday October 05 2018
Malaysia Trade Surplus Smallest in Near 5-1/2 Years
Department of Statistics, Malaysia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Malaysia's trade surplus narrowed sharply to MYR 1.6 billion in August of 2018 from MYR 9.9 billion in the same month of the prior year and far below market estimates of a MYR 9 billion surplus. It is the smallest trade surplus since April 2013, as exports fell while imports surged.

In August sales fell by 0.3 percent from a year earlier to MYR 81.8 billion from a 9.4 percent gain in July and missing market consensus of a 5.7 percent growth. It was the first decline since February, as sales declined for: palm oil and palm oil-based products (-22.9 percent to MYR 5.1 billion; 6.2 percent of total exports); liquefied natural gas/LNG (-22.5 percent to MYR 3.2 billion, 3.9 percent of total exports); natural rubber (-10.5 percent to MYR 337 million, 0.4 percent of total exports), and timber and timber-based products (-2.4 percent to 2.0 billion, 2.4 percent of total exports). By contrast, sales rose for: electrical & electronic products (3.2 percent to MYR 32 billion, 39.2 percent of total exports); crude petroleum (64.9 percent to MYR 3.3 billion, 4 percent of total exports); refined petroleum products (5.4 percent to MYR 4.5 billion, 5.5 percent of total exports).
 
Sales shrank to the US (-2 percent); the EU (-8.9 pct) while went up to China (4.5 pct); Singapore (2.2 pct).
 
Imports surged 11.2 percent year-on-year to MYR 80.2 billion in August of 2018 from a 10.3 percent rise in the prior month, and beating market expectations of a 10.1 percent rise, as capital goods surged 25.3 percent to MYR 11.7 billion, mainly due to a rise in transport equipment, industrial (180.2 percent), and capital goods except transport equipment (13.1 percent). Also, imports of consumption goods increased 14.2 percent to MYR 7.1 billion), led by durables (57.9 percent); semi-durables (26.2 percent), and non-durables (6.3 percent). Additionally, purchases of intermediate goods rose 4.3 percent to MYR 45 billion, mainly due to an increase in parts and accessories of fuel lubricants, primary (126.4 percent), and parts and accessories of transport equipment (33.1 percent). 

In July the trade surplus stood at MYR 8.3 billion.
 
Considering the first eight months of the year, the trade surplus increased to MYR 70.4 billion from MYR 63 billion in the same period of 2017.


Wednesday September 19 2018
Malaysia Inflation Rate at 3-1/2 Year Low of 0.2% in August
Department of Statistics, Malaysia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Malaysia's consumer price inflation eased to 0.2 percent year-on-year in August of 2018 from 0.9 percent in the previous month and below market expectations of 0.4 percent.It is the lowest inflation rate since February 2015, as inflation slowed for both food and transport while housing inflation was steady.

Year-on-year, prices rose at a softer pace for food & non-alcoholic beverages (0.4 percent from 0.7 percent); transport (2.1 percent from 6.7 percent); restaurants and hotels (0.7 percent from 1.0 percent) while housing, water, electricity, gas, and other fuels prices were steady (at 2.0 percent). Additionally, prices fell for: communication (-4.0 percent from -3.9 percent); alcoholic beverages & tobacco (-1.0 percent from -0.8 percent); recreation services & culture (-2.2 percent from -2.4 percent); clothing and footwear (-2.9 percent from -3.0 percent); furnishings, household equipment & routine maintenance (-1.7 percent, the same pace as in July) and miscellaneous goods & services (-3.0 percent, the same pace in July).  

On the other hand, cost advanced faster for education (1.1 percent from 1.0 percent) while prices of health were flat, the same as in July. 

Annual core consumer prices decreased 0.2 percent year-on-year in August, the same pace as July, and marking the second straight month of deflation.

On a monthly basis, consumer prices went up 0.2 percent, the same pace as in the prior month.


 
 


Wednesday September 05 2018
Malaysia Leaves Monetary Policy Unchanged
Bank Negara Malaysia | Joana Taborda | joana.taborda@tradingeconomics.com

The Central Bank of Malaysia kept its benchmark interest rate unchanged at 3.25 percent on September 5th, 2018, as widely expected. Policymakers said the economy maintains its underlying fundamental strength, with steady economic growth, low unemployment and a current account surplus but mentioned some immediate risks: trade tensions, prolonged weakness in the mining and agriculture sectors and some domestic policy uncertainty.

Statement by the Bank Negara Malaysia:

The global economic expansion is continuing, albeit with increasing divergence across economies and signs of a slower momentum. In the advanced economies, growth will remain underpinned by strong labour market conditions and policy support. In Asia, growth will be supported by sustained domestic activity and external demand. Although global growth is currently sustained, risks to growth have increased. Trade tensions continue to be a key source of downside risk. Greater volatility in the international financial markets and monetary policy normalisation in the advanced economies could lead to further capital outflows and financial market adjustments in emerging economies.

For Malaysia, supply disruptions in the mining and agriculture sectors led to more moderate growth in the second quarter of 2018. On the demand side, growth remained supported by private sector activity with further impetus from net exports. Looking ahead, private consumption, which was boosted by the tax holiday, will continue to be driven by steady wage and employment growth. Investment activity is projected to be underpinned by continued capacity expansion in key sectors, particularly in the export-oriented industries, driven by favourable demand and efforts to enhance automation. Public sector spending however is expected to weigh on growth as the Government embarks on reprioritisation of expenditure. The external sector will continue to benefit from the sustained global growth momentum. In the immediate term, the economy faces downside risks stemming from heightened trade tensions, prolonged weakness in the mining and agriculture sectors and some domestic policy uncertainty. On balance, the Malaysian economy is expected to remain on a steady growth path.

Headline inflation was at 0.9% in July 2018. Going forward and continuing into 2019, headline inflation is expected to edge upwards taking into consideration the impact of policy measures on domestic cost factors. The impact of the changes in the consumption tax policy on headline inflation will be transitory and lapse towards the end of 2019. Underlying inflation is nevertheless expected to remain relatively stable.

In line with regional economies, the domestic financial markets continue to experience non-resident portfolio outflows due to ongoing global developments. Despite these adjustments, domestic financial markets remain resilient with domestic monetary and financial conditions supportive of economic growth. The financial sector remains sound, with financial institutions continuing to operate with strong capital and liquidity buffers. In addition, the domestic economy maintains its underlying fundamental strength, with steady economic growth, low unemployment and current account surplus of the balance of payments. Bank Negara Malaysia’s monetary operations will continue to ensure sufficient liquidity to support the orderly functioning of money and foreign exchange markets and intermediation activity.

At the current level of the OPR, the degree of monetary accommodativeness is consistent with the intended policy stance. The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.


Wednesday September 05 2018
Malaysia August Trade Surplus Largest in 3 Months
Department of Statistics, Malaysia l Chusnul Ch Manan| chusnul@tradingeconomics.com

Malaysia's trade surplus increased 1.7 percent to MYR 8.3 billion in July of 2018 from MYR 8 billion in the same month of the prior year and far above market estimates of a MYR 6.3 billion surplus. It is the largest trade surplus since April. Exports rose 9.4 year-on-year to MYR 86.1 billion while imports went up 10.3 percent to MYR 77.8 billion.

In July sales increased by 9.4 percent from a year earlier to MYR 86.1 billion from a 7.6 percent gain in June and beating market consensus of a 6.6 percent growth. Sales grew for: Sales grew for: electrical & electronic products (23.6 pct to MYR 34.5 billion, 40.1 percent of total exports); crude petroleum (90.1 pct to MYR 3.8 billion, 4.4 percent of total exports); natural rubber (3.3 pct to MYR 334.8 million, 0.4 percent of total exports); and timber and timber-based products (0.4 pct to 1.9 billion, 2.2 percent of total exports).In contrast outbound shipments fell for: refined petroleum products (-12.3 pct to MYR 5.5 billion, 6.4 percent of total exports); palm oil and palm oil-based products (-13.6 pct to MYR 5.5 billion, 6.4 percent of total exports); liquefied natural gas/LNG (-38.4 pct to MYR 2.4 billion, 2.8 percent of total exports).

Sales went up to China (37.5 pct); the US (6.7 pct, and the EU (2.2 pct) while shrank to Singapore (-2 pct).
 
Imports went up 10.3 percent year-on-year to MYR 77.8 billion in July of 2018 from a 14.9 percent jump in the prior month, as capital goods increased by 4.7 percent to MYR 9.6 billion, mainly due to a rise in transport equipment, industrial (32.5 pct) and capital goods except transport equipment went up (1 pct). In addition, purchases rose for consumption goods (11.1 pct to MYR 6.7 billion), led by durables (27 pct), non-durables (10.3 pct), and semi durables (21.4 percent). Meantime, sales of intermediate goods edged down 0.1 percent to MYR 39.9 billion, dragged by parts & accessories of capital goods except transport equipment (-32.4 pct) while sales rose for fuel & lubricant, primary (51.5 pct); fuel & lubricants, processed, others (144.4 pct), and industrial supplies, processes (11.4 pct).
 
In June the trade surplus stood at MYR 6 billion.
 
Considering the first seven months of the year, the trade surplus increased to MYR 68.8 billion from MYR 53.1 billion in the same period of 2017.



Friday August 24 2018
Malaysia July Inflation Rate Matches Estimates
Department of Statistics, Malaysia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Malaysia's consumer price inflation increased to 0.9 percent year-on-year in July of 2018 from a near 3-1/2 year low of 0.8 percent in the previous month and matching market expectations. Inflation rose for both housing and transport while food inflation eased.

Year-on-year, prices rose at a faster pace for housing, water, electricity, gas, and other fuels (2.0 percent from 1.5 percent in June); transport (6.7 percent from 5.5 percent) and education (1.0 percent from 0.9 percent). Additionally, cost fell less for recreation services & culture (-2.4 percent from -2.5 percent) and clothing and footwear (-3.0 percent from -3.1 percent).
 
Meantime, prices increased at a softer pace for food & non-alcoholic beverages (0.7 percent from 0.8 percent); restaurants and hotels (1.0 percent from 1.3 percent) while cost of health was flat after rising 0.3 percent in June. Also, prices continued to decline for furnishings, household equipment & routine maintenance (-1.7 percent from -1 percent); miscellaneous goods & services (-3.0 percent from -2.6 percent); alcoholic beverages & tobacco (-0.8 percent from -0.7 percent) and communication (-3.9 percent, the same pace as in June). 

Annual core inflation decreased 0.2 percent in July after an increase of 0.1 percent in June, and marking the first deflation since the series began in 2016.

On a monthly basis, consumer prices went up 0.2 percent, after falling 1.2 percent in the prior month.


Friday August 17 2018
Malaysia Allows More Flexibility for Exporters: Bank Negara
Bank Negara Malaysia l Rida | rida@tradingeconomics.com

Bank Negara Malaysia would allow greater flexibility for exporters in managing their export proceeds, the central bank said in a statement on its website. Also, the central bank will provide more flexibility for hedging of foreign currency obligations and allow non-resident corporations to trade in ringgit denominated interest rate derivatives. All those measures, which will go into effect immediately, were taken to facilitate operational efficiencies and risk management by businesses and financial institutions.

Excerpts from the statement by the central bank:

Bank Negara Malaysia announces changes in the foreign exchange administration policies aimed at facilitating efficiencies and risk management by businesses and financial institutions.

The changes are:

I. Greater flexibility in the management of export proceeds
Exporters are allowed to automatically sweep export proceeds into their Trade Foreign Currency Accounts maintained with onshore banks to meet up to 6 months’ foreign currency obligations without the need to first convert proceeds into ringgit.  The flexibility is available upon exporters establishing their 6 months’ foreign currency obligations with their respective onshore banks.

II. Flexible hedging of foreign currency obligations

Greater flexibility is provided upon application to the Bank for residents to hedge:
- foreign currency obligations beyond 6 months; and
- foreign currency exposures arising from invoices issued in foreign currency under international pricing practices for domestic trade in goods and services.  

III.Wider access for non-residents to the onshore market financial market
Non-resident corporations are allowed to trade in ringgit-denominated interest rate derivatives via the Appointed Overseas Offices, subject to back-to-back arrangements with onshore banks.  This aims to further deepen the onshore market for interest rate derivatives to support risk management by businesses. 



Friday August 17 2018
Malaysia Q2 GDP Growth Weakest in 1-1/2 Years
Department of Statistics, Malaysia | Chusnul Ch Manan | chusnul@tradingeconomics.com

The Malaysian economy grew 4.5 percent year-on-year in the second quarter of 2018, following a 5.4 percent expansion in the previous three-month period and missing market consensus of 5.2 percent. It was the weakest growth rate since the fourth quarter of 2016, as net external demand contributed negatively to GDP growth, while private consumption, investment, and government spending continued to increase at a solid pace.

In the second quarter, exports went up by 2.0 percent, slower than a 3.7 percent rise in the March quarter. Imports rose at a faster 2.1 percent, recovering from a 2 percent fall in the previous three months.
 
Private expenditure increased by 8.0 percent, following a 6.9 percent rise in the previous period, driven by higher consumption of food & beverages, communication, and restaurants & hotels. Also, gross fixed capital formation expanded 2.2 percent, much faster than a 0.1 percent growth in the preceding quarter, due to a rebound in machinery & equipment; and government spending went up 3.1 percent, faster than a 0.4 percent increase in the prior three months.
 
On the production side, growth slowed for both manufacturing (4.9 percent vs 5.3 percent in Q1) and construction (4.7 percent vs 4.9 percent). In addition, the agriculture sector contracted (-2.5 percent vs 2.8 percent in Q1), as well as the mining & quarrying sector (-2.2 percente vs 0.1 percent). On the positive note, services output expanded by 6.5 percent, the same pace as in the first quarter.
 
On a quarter-on-quarter seasonally-adjusted basis, the GDP rose by 0.3 percent in the second quarter, the smallest increase since the first quarter of 2013.
  
Considering the first half of the year, the economy expanded by 4.9 percent year-on-year, compared to a 5.7 percent expansion in the same period of 2017.
 
Moving forward, economic growth is expected to remain on a steady growth path in 2018, boosted mainly by domestic demand. Meanwhile, labour market conditions and capacity expansion will continue to support robust private consumption and investment respectively. Headline inflation is expected to moderate, and the extent of the moderation would depend on the pass-through from changes in the consumption tax policy.