Export growth won't help Malaysian economy, says DBS

Beware the  distorted by base effect.

This is no more that a huge technical lift coming from the poor set of export number in the same period in 2011.

DBS Group Research noted:

A better export growth figure in today’s release of May trade data may not necessarily imply a better outlook on the external front in the near term. An improvement in export growth to 6.1% YoY has been penciled into our forecast, from a contraction of 0.1% in the previously month. Imports will likely rise by 8.9%, sustained by still resilient domestic demand, which will thus deliver a trade surplus of MYR 7.7bn.

Granted that it is still an improvement after all. And it may be tempting to conclude that Malaysia’s exports have bucked the trend of declines in regional export performance amid the global uncertainties or that Malaysia’s exports have rebounded strongly after a slight downside blip in April. But we should be mindful that the headline number is greatly distorted by base effect. It receives a huge technical lift from the poor set of export number in the same period last year.