KUALA LUMPUR (April 24): Malaysia's trade with China rose 3% year-on-year (y-o-y) in the first quarter of 2024 (1Q2024), following a better-than-expected gross domestic product (GDP) growth seen in the world's second largest economy during the quarter, according to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.
Speaking to reporters following the release of the ministry's report card for 1Q2024, Zafrul noted that China remains Malaysia's largest trading partner, accounting for 16% of the country's total trade for the quarter.
"For the first quarter this year, trade with China has actually gone up and when we see improvement in China's economy, there will definitely be positive spillover [effects] to Malaysia," he said.
China's economy got off to a strong start in 2024, as GDP grew 5.3% y-o-y in 1Q, beating analysts' forecast in a Reuters poll of 4.6% and up from the 5.2% expansion recorded in the previous quarter. On a quarterly basis, growth picked up to 1.6% from 1.4% in the previous three months.
Malaysia, meanwhile, achieved its highest-ever 1Q trade, export and import values in January to March 2024, in line with global trade recovery. The country's total trade expanded 7.1% y-o-y to RM690.59 billion for a trade surplus of RM34.22 billion in 1Q2024, with exports growing 2.2% y-o-y to RM362.41 billion, the Ministry of Investment, Trade and Industry (Miti) announced last Friday.
In 2023, overall exports fell 8%, the biggest contraction since 2009, to RM1.43 trillion, though it is the third year in a row that Malaysian exports had surpassed the RM1 trillion mark.
Total trade for 2023 fell 7.3% y-o-y to RM2.64 trillion, in tandem with slower global demand, lower commodity prices, geopolitical uncertainties, high inflation rate, downcycle in the semiconductor sector and high base effect from the previous year.
After 2023's disappointing trade numbers, economists forecast that the expected recovery in China's economy, as well as the US, being Malaysia's major trading partners, would help support the country's export growth this year.
The anticipated upturn in the global technology cycle in 2024 was also expected to bolster Malaysia's export numbers, of which electrical and electronic (E&E) products make up over a third of the total.
Zafrul said Miti is optimistic that there will be an uptrend in the semiconductor sector as industry players are building up capacity to meet increasing demand.
"Based on our discussion with companies, they are building up capacity, so we will see the export [of E&E products] from Malaysia going up," he said.