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.




Friday August 03 2018
Malaysia June Trade Surplus Smallest in 13 Months
Department of Statistics, Malaysia l Chusnul Ch Manan| chusnul@tradingeconomics.com

Malaysia's trade surplus slumped 38.9 percent to MYR 6.0 billion in June of 2018 from MYR 9.9 billion in the same month of the prior year and far below market estimates of a MYR 10.16 billion surplus. It is the smallest trade surplus since May last year, mainly due to a surge in imports.

In June sales increased by 7.6 percent from a year earlier to MYR 78.7 billion from a 3.4 percent gain in May and below market consensus of a 11.5 percent growth. Sales grew for: electrical & electronic products (6.9 percent to MYR 29.9 billion, 38.0 percent of total exports); refined petroleum products (40.6 percent to MYR 5.1 billion, 6.5 percent share) and crude petroleum (25.3 percent to MYR 2.4 billion, 3.0 percent share).
 
In contrast outbound shipments fell for: palm oil-based products (-20.4 percent to MYR 4.9 billion, 6.3 percent share); liquefied natural gas (-31.2 percent to MYR 2.7 billion, 3.5 percent share);  natural rubber (-5.6 percent to MYR 310.3 million, 0.4 percent share), and timber and timber based products (-0.8 percent to MYR 1.7 billion, 2.2 percent share).
 
Exports rose to China (16.9 percent), followed by those to the ASEAN countries (7.4 percent); the EU countries (5.6 percent). By contrast exports fell to the US (-1.9 percent) and Singapore (-0.3 percent). 

Imports surged 14.9 percent year-on-year to MYR 72.6 billion in June of 2018 from a 0.1 percent rise in the prior month, as capital goods jumped by 14.1 percent to MYR 9.4 billion, mainly due to a rise in transport equipment, industrial (44.6 pct) and capital goods except transport equipment went up (10.3 pct). Also, sales of intermediate goods increased 3.1 percent to MYR 39.4 billion, driven by fuel & lubricant, primary (51.5 pct); fuel & lubricants, processed, others (30.8 pct); parts & accessories of transport equipment (17.3 pct); industrial supplies, processes (12.6 pct) while sales of parts and accessories of capital goods except transport equipment declined (-16.9 pct). In addition, purchases rose for consumption goods (4.9 pct to MYR 5.9 billion), led by durables (23.0 pct), non-durables (9.6 pct),
 
In May the trade surplus stood at MYR 8.1 billion.
 
Considering the first half of the year, the trade surplus increased sharply to MYR 60.6 billion from MYR 42.94 billion in the same period of 2017.





Wednesday July 18 2018
Malaysia June Inflation Rate at Near 3-1/2 Year Low of 0.8%
Department of Statistics, Malaysia l Chusnul Ch Manan | chusnul@tradingeconomics.com

Malaysia's consumer price inflation eased to 0.8 percent year-on-year in June of 2018 from 1.8 percent in the previous month and below market expectations of 1.3 percent. It is the lowest inflation rate since February 2015, as prices were lower mainly for food and housing, following the withdrawal of a goods and services tax on June 1.

Year-on-year, prices rose at a softer pace for: food & non-alcoholic beverages (0.8 percent from 2.2 percent in May); housing, water, electricity, gas, and other fuels (1.5 percent from 2.1 percent); restaurants and hotels (1.3 percent from 2.1 percent); health (0.3 percent from 1.9 percent), and education (0.9 percent from 1.2 percent).

In addition, prices fell for: recreation services & culture (-2.5 percent from 0.5 percent in May); furnishings, household equipment & routine maintenance (-1 percent from 1.5 percent); miscellaneous goods & services (-2.6 from 0.4 percent); alcoholic beverages & tobacco (-0.7 percent from 0.1 percent); clothing and footwear (-3.1 percent from -0.7 percent); and communication (-3.9 percent from -0.9 percent). 

Meanwhile, cost increased at a faster pace for transport (5.5 percent from 3.8 percent in May).
 
Annual core inflation eased sharply to 0.1 percent in June (from 1.5 percent), and marking the lowest figure on record.

On a monthly basis, consumer prices dropped 1.2 percent, after increasing by 0.2 percent in May.




Wednesday July 11 2018
Malaysia Leaves Key Rate Unchanged at 3.25%
Bank Negara Malaysia l Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Central Bank of Malaysia held its benchmark interest rate at 3.25 percent on July 11th, 2018, as widely expected. Growth is projected to be sustained and inflationary pressures would weaken this year, especially after the new government removed the 6% Goods and Services Tax (GST) imposed in 2015.

Statement by the Bank Negara Malaysia:

The global economy continues to expand albeit with some divergence across economies while global trade sustained its growth momentum. In the advanced economies, rising income and policy support, particularly in the US, will continue to drive growth. Growth in Asia will be supported by sustained domestic activity and external demand. However, the balance of risks to the outlook has tilted to the downside. The intensification of global trade tensions could affect sentiments and weigh on trade, investment and consumption. Coupled with ongoing monetary policy normalisation in the advanced economies, shifting investor expectations and sentiments could lead to further capital outflows and financial market adjustments in some emerging economies.

The Malaysian economy continued to expand in the first half of 2018, supported by private sector activity with additional impetus from net exports. The positive growth performance is expected to be sustained, driven by both domestic and external demand. Private consumption will be underpinned by continued wage and employment growth, with an additional lift from higher household spending due to the tax holiday. Investment activity is projected to be supported by capacity expansion mainly in the export-oriented industries and ongoing infrastructure projects, particularly in the transport and utilities sub-sectors. The external sector will continue to benefit from the sustained global growth momentum. The growth outlook will be further supported with greater certainty in domestic policy in the coming months. Overall, the Malaysian economy is expected to remain on a steady growth path.

Headline inflation for 2018 is projected to be lower than earlier forecast taking into consideration the impact of recent policy measures on domestic cost factors. The impact of these measures on inflation, however, is transitory. Headline inflation is likely to turn negative in some months and remain low in the first half of 2019 before trending upwards as these transitory effects lapse. Core inflation is nevertheless expected to remain relatively stable in line with sustained domestic demand.

The positive domestic economic outlook, sound financial sector and improving current account surplus of the balance of payments will continue to support Malaysia’s fundamentals. Domestic financial markets have remained resilient despite non-resident portfolio outflows. The ringgit exchange rate would be more reflective of the underlying fundamentals of the economy when the external and domestic uncertainties recede. Notwithstanding the heightened financial market volatility, the domestic monetary and financial conditions remain supportive of economic growth. Bank Negara Malaysia’s monetary operations 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.


Thursday July 05 2018
Malaysia Trade Surplus Widens Sharply in May
Department of Statistics, Malaysia l Chusnul Ch Manan| chusnul@tradingeconomics.com

Malaysia's trade surplus jumped 47.1 percent to MYR 8.1 billion in May of 2018 from MYR 5.5 billion in the same month of the prior year but below market estimates of a MYR 11 billion surplus, as exports rose more than imports.

In May sales increased by 3.4 percent from a year earlier to MYR 82.1 billion from a 14 percent jump in April and below market consensus of a 6.4 percent growth. Sales grew for: electrical & electronic products (2.1 percent to MYR 29.2 billion, 35.5 percent of total exports); crude petroleum (45.8 percent to MYR 3.1 billion, 3.8 percent share); refined petroleum products (10 percent to MYR 7.1 billion, 6.2 percent share); and liquefied natural gas (61 percent to MYR 3.1 billion, 3.8 percent share).
 
In contrast outbound shipments fell for : natural rubber (-19.1 percent to MYR 334.9 million, 0.4 percent share); timber and timber based products (-14.3 percent to MYR 1.7 billion, 2.1 percent share), and palm oil-based products (-15.4 percent to MYR 5.8 billion, 7 percent share). Exports rose to the EU countries (11.4 percent), followed by those to China (7.4 percent). By contrast exports fell to Singapore (-9.8 percent); the US (-5.6 percent), and the ASEAN countries (-1.9 percent).
 
Imports edged up 0.1 percent year-on-year to MYR 74 billion in May of 2018 from a 9.1 percent surge in the prior month, as capital goods declined by 0.7 percent to MYR 9.8 billion, mainly due to a fall in capital goods except transport equipment fell (-15.3 pct) while purchases of transport equipment, industrial jumped (105.6 pct). On the other hand, sales of intermediate goods dropped 5.3 percent to MYR 40.1 billion, dragged by parts and accessories of capital goods except transport equipment (-11.3 pct); fuel & lubricants, processed, others (-41.2 pct) . Also, purchases declined for consumption goods (-10.2 pct to MYR 6 billion), led by semi-durables (-21 pct), non-durables (-6.4 pct), and food and beverages, primary mainly for household consumption (-12.3 pct).
 
In April the trade surplus stood at MYR 13.1 billion.
 
Considering January to May, the trade surplus increased sharply to MYR 54.6 billion from MYR 33.05 billion in the same period of 2017.