Malaysia's exports fall in January as sales to China slump

KUALA LUMPUR (Reuters) - Malaysia's exports slid 0.6 per cent in January from a year earlier, wrongfooting expectations for a rise, due mainly to a 22.7 per cent fall in sales to China.

Exports to the European Union, the United States and India increased, as those economies improved, and overseas sales of electrical and electronic products rose, offsetting lower exports of commodities.

Imports also came in well below forecasts with a fall of 5.3 per cent, partly due to reduced imports of refined petroleum products.

A Reuters poll had forecast a 3.0 percent rise in exports, and a 2.0 per cent rise in imports. The faster fall in imports resulted in the trade surplus widening to RM9.01 billion (S$3.37 billion) in January from RM6.4 billion in the same month a year ago.

The weaker export figure partly reflected lower commodity prices, said Michael Wan of Credit Suisse.

Economists had expected imports to grow at a slower pace due to a weaker ringgit. The weaker currency helped boost exports in ringgit terms. The ringgit fell more than 4 per cent year-to-date, making it the second worst performing currency in emerging Asia.

"Moving forwards, export growth could go down further," said Wan, adding that trade balance is likely to "grind downwards" in coming months.

Export demand from China suffered as factory output declined during January in the world's second largest economy.

Edward Lee, economist at Standard Chartered in Singapore, expected trade with China, Malaysia's biggest trading partner, to improve in the second half of the year as the Chinese economy stabilises.

"We are expecting some sort of a tale of two halves but it's not so distinct," said Lee.