KUALA LUMPUR: External demand for Malaysian manufactured products is likely to have improved in January as global growth gets on to the recovery path.
A Business Times poll expects exports to grow by an average of 3.68 per cent and imports by 6.13 per cent, bringing the trade balance to an average RM7.96 billion.
The Industrial Production Index (IPI) is expected to post a 5.38 per cent growth year-on-year. Export-oriented manufacturing activities will support demand to the industrial output in January, led by the domestic industries.
Both the IPI and trade data will be released by the Statistics Department and International Trade and Industry Ministry, respectively, today.
DBS Bank economist Irvin Seah said both data and industrial production figures for January will point to a better external outlook ahead.
As it is, global outlook has improved. Economic data from Asia and developed economies are reflecting a gradual normalisation process.
"The purchasing managers indexes (PMIs) of key export market have been grinding north while global electronics demand is also recovering. These make for better export and manufacturing performance. In addition, the domestic sector, led by the strong investment growth, will also provide an impetus to better industrial production," said Seah.
Overall, while domestic growth will remain a key driver of growth, the external improvement will deliver the extra boost, he added.
But he warned that there could be downside risk on the January-February export and industrial production data due to the Chinese New Year effect.
Production and export activities may have slowed down during the festive period due to fewer working days in the month plus workers going on leave.
"With the global outlook normalising, a more pronounced pick-up can be expected from March onwards."
Bank of America Merrill Lynch Asean economist Dr Chua Hak Bin said lower palm oil export tax at zero per cent from January likely boosted crude palm oil shipments, while improving global demand may have lifted manufactured exports.
MIDF Research's Anthony Dass expects the export-oriented manufacturing sector to boost growth, given a turnaround in the imports of intermediate goods in December. It is also compounded by the contribution of commodities, which he expects to be modest due to softer prices.
"We expect imports to remain strong, coming from capital goods and possibly from intermediate goods."