Malaysian Exports Post Biggest Drop in Almost 7 Years (Update1)

Feb. 12 (Bloomberg) -- Malaysia’s exports fell the most in almost seven years in December as electronics and commodities sales slid amid dwindling global orders.

Overseas shipments dropped 14.9 percent from a year earlier to 46.1 billion ringgit ($12.8 billion) after slipping 4.9 percent in November, the trade ministry said in a statement in Kuala Lumpur today. The median estimate in a Bloomberg News survey of 13 economists had been for a 9 percent decline.

Exports by Malaysia and its neighbors have “weakened notably in recent months in the face of the collapse in global demand,” said David Cohen, director of Asian forecasting at Action Economics in Singapore.

Malaysia expects 2009 growth to slow to an eight-year low as the global recession hurts demand for made-in-Asia products such as Dell Inc. computers and Intel Corp. chips. Industrial output slumped 15.6 percent in December, a report yesterday showed, adding pressure on the government to boost spending as the central bank said it won’t cut interest rates further.

Bank Negara Malaysia will keep its key interest rate unchanged for now as priority is given to providing credit to businesses and consumers, Governor Zeti Akhtar Aziz said yesterday. The central bank in January cut the benchmark by three-quarters of a percentage point to 2.5 percent, the biggest reduction in borrowing costs in more than a decade.

The government is planning a second economic stimulus package after announcing spending worth 7 billion ringgit in November. The second plan may result in a wider budget deficit than the 4.8 percent of gross domestic product estimated earlier, Deputy Prime Minister Najib Razak said Jan. 29.

Record Declines

Asia’s export-dependent economies including Taiwan and South Korea have posted record declines in shipments abroad. Singapore, Japan and the U.S., Malaysia’s biggest overseas markets, are all in recession.

Malaysia’s exports to the U.S. dropped 30 percent to 5.5 billion ringgit in December from a year earlier amid a decline in electrical and electronics shipments, the ministry said today.

Shipments of electrical and electronics goods, which made up 37 percent of total exports in December, slid 26 percent from a year earlier.

Palm oil sales abroad fell 6.1 percent in December as prices eased from record highs reached earlier last year. Malaysia is Southeast Asia’s second-largest oil and gas producer and the world’s No. 2 palm oil seller.

Imports dropped 23.1 percent in December to 34.4 billion ringgit, leaving a trade surplus of 11.7 billion ringgit. Exports grew 9.6 percent in 2008, while imports expanded 3.3 percent, leaving a trade surplus of 142 billion ringgit.