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KUALA LUMPUR (Jan 19): Malaysia’s exports, which dropped much lower than anticipated in December 2023, is expected to get a boost from an anticipated upturn in the global technology cycle in 2024. Along with other improving global factors, this is expected to bolster the country’s export numbers this year, according to economists.

December’s 10% year-on-year decline — double the Bloomberg consensus forecast of a 5% fall — pulled trade surplus down to RM11.8 billion, the lowest recorded since May 2020.

Overall exports for 2023 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.

Imports for 2023, meanwhile, weakened 6.4% year-on-year (y-o-y) to RM1.212 trillion. 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 last year.

Despite the disappointing numbers, MIDF Research has maintained its projection that external trade will recover this year, in view of improving electrical and electronic (E&E) exports and better export performance reported by several regional countries.

“Apart from the turnaround in the global E&E market, we expect continued (albeit moderate) economic growth in China and the US will support export growth this year,” it said in an economic review note on Friday.  “Nevertheless, we opine several downside risks could affect global trade this year, such as increased geopolitical and trade tensions, sharper slowdown in major economies and still sluggish global manufacturing activities,” MIDF Research added.

RHB Research, likewise, maintained its sanguine view of Malaysia’s trade outlook for 2024, as it anticipated that export momentum would pick up in the first half of 2024.

“Our view is founded on three key catalysts: a rosier global and regional economic outlook, more positive economic dynamics of China and the re-acceleration in the global technology cycle,” it said in a note on Friday.

E&E exports in Malaysia and other regional countries are expected to grow further in 2024, given higher demand, specifically with a positive spillover effect resulting from improved trade performance and manufacturing activities in China, said RHB Research.

It pointed to the World Semiconducto