Malaysia posted a better-than-expected trade surplus in October, indicating that the country’s economic condition continued to strengthen in spite of the global economic downturn.
According to the data released Friday by the Department of Statistics, Malaysia’s trade surplus rose to 9.6 billion Malaysian ringgit ($3.1 billion) in October from 6.5 billion ringgit in September and above the analysts’ expectation of 7.2 billion ringgit. However, exports dropped 3.2 percent in October compared to those in the same month last year, down from a 2.6 percent rise in September.
Malaysia's exports to China continued to fall in October to 15.3 percent from a 10.8 percent decrease in September. Exports to the European Union remained weak with a 14.2 percent fall in October compared to the 12.5 percent decrease in September. Meanwhile, exports to the U.S. rose to 11 percent in October from a 6.3 percent increase in September.
This report comes after it was revealed last month that Malaysia’s economy grew at a faster-than-expected pace in the third quarter. According to the data released last month by Bank Negara Malaysia (BNM), the country’s gross domestic product, which measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy, was up 5.2 percent in the third quarter of this year compared to that in the second quarter. This was above the analysts’ expectation of 4.8 percent but down from a rise of 5.6 percent in the second quarter.
“It is surprising that the poor external environment has not taken a greater toll on the domestic economy. The government’s Economic Transformation Program (ETP) appears to be largely responsible for the outperformance. Under the ETP, the government is aiming to sustain investment growth of more than 12% a year until 2020. To help push investment along it is offering financial incentives and preferential bureaucratic treatment in favored sectors. This strategy appears to be paying off so far,” Capital Economics said in a note.
Last month, the BNM kept its policy rate unchanged at 3 percent as expected by the analysts, who feel there is little need for the central bank to provide support in the near term since the country’s economy is performing well in spite of the global slowdown.