KUALA LUMPUR, Dec. 20 (Xinhua) -- Despite positive exports growth in November, economists foresee Malaysia's exports growth to slow down moving into 2023, due to weaker global demand.
Affin Hwang Investment Bank said in a note on Tuesday that despite the double-digit growth in exports in November, it believes that the current slowdown in global economic activities is likely to impact Malaysia's overseas demand.
The research house also expects further tightening in monetary policy in 2023 by central banks around the world, increasing the risk of a global recession and stagnant global trade growth.
For 2023 as a whole, due to the base effect, it expects real exports of goods and services to record a slower growth of 3.5 percent year on year as compared to 13.5 percent estimated export growth for 2022.
"We expect the economic growth momentum to start to moderate from the fourth quarter of 2022 and into 2023, mainly due to the uncertain external factors, as we believe the balance of risks remains tilted to the downside," it said.
Meanwhile, Public Invest Research said in a note that in view of global economic slowdown, it believes the performance of Malaysia's manufacturing sector will trend in tandem with the monthly global semiconductor sales, which has recently shown further weakness.
It said the continued global financial conditions tightening is expected to further increase pressure on highly indebted governments, aggravating vulnerabilities and harming trade and investment flows.
"All these factors had resulted in global economic slowdown and prolonged supply chain disruptions, which also pose downside risks to Malaysia's trade performance going into 2023," it said.
Thus, the research house anticipates growth in real exports of goods and services for Malaysia to moderate to 3.3 percent year on year in 2023 from the predicted 11.4 percent for 2022.
UOB Global Economics and Markets Research also said although Malaysia's exports grew at a double-digit pace in November, momentum had been moderating as seen from easing exports levels from October to November.
The slower regional export performance also suggests softer global demand amid the global tech down cycle, it added.
"As global economic indicators continue to flag rising recession risks for major economies in 2023, we maintain our cautious outlook for Malaysia's exports with a marginal gain of 1.5 percent for 2023 versus an estimated 26 percent expansion for 2022," it said.
The persistence of a high statistical base for two consecutive years in 2021 and 2022 is also expected to take a toll on the export growth momentum going into 2023.
CGS CIMB also said in a note that exports growth is likely to dwindle further, given weakening prospects ahead.
According to the research house, manufacturing exports have shown two consecutive months of negative month-on-month growth with the possibility of more declines ahead.
Besides, global semiconductor sales contracted by 3 percent year on year in September 2022, the first time since January 2020, indicating a reduction in demand for global chips amid fears of a global economic slowdown.
Malaysia's commitment as a member of Organization of the Petroleum Exporting Countries and allies (OPEC+) to lower oil production may also lead to a possibility of a 5 percent decline in oil and gas shipments.
Overall, it projects Malaysia's real export growth to moderate to 5.8 percent year on year in 2023 from a growth forecast of 13.5 percent in 2022. ■