KUALA LUMPUR: Malaysia’s gross exports are projected to moderate by 1.6 per cent across all sectors amid the expected slowdown in external demand due to the lacklustre growth in the wake of ongoing geopolitical instability as well as projected ease in the global commodity prices.
The Ministry of Finance (MoF) said exports of manufactured goods are anticipated to edge up by 1.6 per cent, resulting from continuous demand for both electrical and electronics (E&E) and non-E&E products, which form the share of 45.5 per cent and 55.5 per cent, respectively.
“The E&E products are expected to grow by 1.8 per cent owing to the ongoing demand for semiconductors particularly electronic integrated circuits, processors and controllers, in line with technological innovation worldwide,” the ministry said in its Updates on Economic and Fiscal Outlook and Revenue Estimates 2023 report released today.
Similarly, exports of non-E&E products are estimated to expand by 1.4 per cent following an increase in demand particularly for petroleum products, chemicals and chemical products, as well as manufactures of metal, despite moderating global economic activities.
Exports of agriculture goods are forecast to grow by 1.3 per cent in 2023, supported by higher demand for palm oil and palm oil-based agriculture products.
Furthermore, export earnings from mining goods are estimated to increase by 1.5 per cent, contributed by stronger demand from major markets particularly for liquefied natural gas (1.5 per cent), albeit moderating demand for crude petroleum (2.2 per cent) among major trading partners.
The ministry also revealed that gross imports are expected to increase by 1.1 per cent in 2023 on account of high demand for intermediate, capital and consumption goods, indicating improved domestic demand and investment activities.
Imports of intermediate goods are projected to grow by 1.4 per cent, attributed to the expansion in domestic manufacturing and construction sectors.
Furthermore, imports of capital goods are anticipated to increase by 1.2 per cent upon the resumption of infrastructure projects which include the East Coast Rail Link, Light Rail Transit 3 and 5G rollout.
“Similarly, as private spending continues to rise in tandem with an increase in consumers’ confidence, imports of consumption goods are anticipated to increase by one per cent, driven by food and beverages,” it said.
Meanwhile, the current account balance is expected to continue registering a surplus of RM55.2 billion or three per cent of Gross National Income in 2023.
Despite slowing demand from major trading partners due to moderating global growth, the goods account is estimated to continue recording a surplus of RM175.2 billion.
An increase in earnings in the transport and travel accounts is anticipated to narrow the deficit in the services account to RM31.3 billion.
“Receipts from transport services are projected to rise to RM29.2 billion, boosted by higher earnings from air travel and cargo handling services provided by domestic companies.
“Similarly, continuous reliance on foreign transport services is anticipated to widen payments for transport to RM62.9 billion, amid expansion in trade activities,” MoF said.
On the other hand, other services account is expected to record a narrower deficit of RM9 billion on account of equally smaller earnings and payments, in tandem with slower global economic activities.
“A narrowing deficit of RM62.9 billion is projected in the primary income account attributed to marginal earnings in the investment income, albeit lower payments by foreign investors, in tandem with the global economic slowdown,” the ministry said.
Additionally, the rapid adoption of digitalisation and automation is expected to increase the compensation for foreign professionals, thus contributing to the widening deficit.
The secondary income account is anticipated to register larger net outflows of RM25.8 billion due to the increase in one-off payment and remittances by foreign workers.
The budget for 2023 was originally tabled by the previous government but could not be passed before Parliament was dissolved. – BERNAMA
