This article first appeared in The Edge Malaysia Weekly on February 5, 2018 - February 11, 2018

THIS week’s major economic release for Malaysia will be the Department of Statistics’ (DoS) release of December’s trade data on Tuesday, which will wrap up the year’s impressive set of numbers. Up to November, exports and imports rose 20.4% and 21.2% year on year respectively, supported by strengthening demand in developed economies. In October, the rate of increase decelerated for both exports and imports as the high base effect kicked in.

Export growth slowed to 14.4% in November from 18.7% the month before. Meanwhile, imports grew 15.2% in November compared with 20.9% in October.

Nevertheless, economists are still optimistic on the outlook for December. UOB Malaysia senior economist Julia Goh has forecast export growth of 13% for the month, bringing full-year export growth to 19.7%.

“I do expect the trend of export growth to ease further mainly due to the high base effect and projecting export growth of 9% in 2018, around 12%-13% y-o-y in the first half before easing to 7%-8% in the second half,” she tells The Edge. Risks to her forecasts include further trade protectionist measures, more aggressive monetary policy tightening that could disrupt global growth and demand, geopolitical risks and a sharper-than-expected slowdown of China growth.

Moody’s Analytics expects Malaysia’s trade surplus to come in at RM9.2 billion compared with RM9.9 billion in November.

“Tech is the key strong point, and electrical and electronics were up a solid 21% y-o-y in November. Palm oil shipments are travelling in a slower lane and were up just 2.7% in November, but they are expected to pick up, with Chinese demand for the edible oil likely to increase in the opening months of 2018,” it said in a note last Friday, adding that the economy remained strong in the final quarter of 2017, following a stellar third quarter.

In a Jan 30 report, MIDF Research shared the same optimism and pointed to rising exports in South Korea and Vietnam, as well as still-positive manufacturing PMIs (Purchasing Managers’ Index) as indicators of continued robust economic activity.

“Looking at our regional partners, South Korea and Vietnam registered y-o-y export growths of 8.9% and 16.6% respectively in December. Based on manufacturing conditions and activity, global and emerging manufacturing PMI figures still indicate an expansionary trend as both hit 54.5 and 52.2 points,” it said.

Notably, the EU posted a record manufacturing PMI of 60.6 points while China maintained above the expansionary line in December at 51.5 points.

“Henceforth, we predict global trade activities in 4Q2017 to remain on an upbeat momentum, albeit at a moderating rate amid of unfavourable base effects,” MIDF Research noted.

This week, Bank Negara Malaysia will release its international reserves position as at Jan 30, 2018, while the DoS will release December’s Industrial Production Index and monthly manufacturing statistics as well as labour force statistics on Friday.

On the corporate side, the earnings reporting season is expected to gather momentum with Bursa Malaysia Bhd’s fourth-quarter results to be out on Monday. According to Bloomberg, other corporates that could be reporting numbers for the final quarter of 2017 include Fraser & Neave Holdings Bhd (Wednesday), Maxis Bhd (Thursday), and MISC Bhd and Westports Holdings Bhd (Friday).

Also worth noting is Securities Commission Malaysia’s fifth Capital Markets Symposium on Tuesday and Wednesday, which is being held in conjunction with its 25th anniversary. The event will feature some 40 speakers, including former prime minister of New Zealand Helen Clark, former finance minister of Greece Yanis Varoufakis, International Valuation Standards Council chairman Sir David Tweedie, United Nations Global Impact founding executive director George Kell and host of CNN’s public affairs show GPS Fareed Zakaria.

In the region, Indonesia will be reporting its 4Q2017 GDP while China will have a busy week with the release of Caixin services PMI, January foreign reserves and trade data, producer price and consumer price indices as well as financing and monetary aggregates.

The central banks of Australia, India, New Zealand and the Philippines will be making key monetary policy decisions this week. Central bank watchers expect them to keep their policy unchanged in February.

In the US, Jerome Powell will be sworn in as the new Federal Reserve chairman on Monday. Market watchers will be keeping a close eye on two Federal Open Market Committee (FOMC) voters — New York Fed President William Dudley and San Francisco Fed John Williams — for their thoughts after last week’s FOMC meeting. They will be speaking at public forums on Wednesday.

US economic data out this week include the Institute of Supply Management’s non-manufacturing statistics for January, December trade data and wholesale inventories.

Meanwhile, the possibility of a government shutdown in the US emerges again when the latest short-term funding bill expires this Thursday. The noise around the matter may have an impact on the US dollar, which has come under pressure lately. The dollar index has fallen 3.55% since the start of the year.

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