Related Topics: | E&E Industry | News Flash | 

Extracted from the Star Publications, 20/04/00, By P.W. Thong

Exports of electrical and electronic goods (E&E), which expanded by 15% year-on-year in February, is expected to continue to drive Malaysia's exports growth, according to Worldsec Research Malaysia.

Its economist Peck Boon Soon said in a research note that recent visits to several electronics companies indicated that industry experts remained upbeat about the sector's outlook. "That was good news for Malaysia as nearly 60% of its exports are from E&E products," he said.

Peck said that in monetary terms E&E goods brought in substantial foreign exchange for Malaysia. "In 1999, the E&E sector recorded a surplus of RM47bil 65% of total trade surplus and up from RM33bil or 55% in 1998.

"Within the sector, office machinery, such as computers, and white goods were the money spinners, raking in surpluses of RM45bil and RM26bil respectively in 1999," Peck said.

Propelled by a strong exports growth of 24.8% year-on-year in February 2000, Malaysia's manufacturing output rose a whopping 30.7% year-on-year in the same month.

"This is expected to help Malaysia to lock in strong economic growth of more than 10% year-on-year in the first quarter of 2000, which is equally strong if not stronger than the 10.6% recorded in the last quarter of 1999," Peck said. 

He said that together with a stronger domestic demand, the real gross domestic product (GDP) growth of Malaysia could well exceed the government and the research house's forecast of 5.8% and 5.5% respectively.

"Barring any major disturbances from the US economy, it may not be a surprise to see Malaysia's GDP growth hitting 6.0% 6.5% this year," he said.

Peck said however that several concerns could affect Malaysia's exports growth.

He said the direction of the US economy remained as an important factor as "it is not very clear as to how far the US can engineer a soft landing for its economy."

"But for now, it seems that the US economy may still be able to sustain its growth this year albeit a slower one. This may help Malaysia to sustain its exports growth," he said.

Nevertheless, Peck said that as the country moved forward, economic growth may slow by the second half of next year, as the US economy slowed further. 

"Coupled with the likelihood of cutback in public spending, this suggests the economic growth for 2001 may not be as promising as compared to this year," he said.

The paper also noted that since the country's E&E sector was dominated by foreign multinational corporations (MNCs), this could be translated into higher services deficit for the country.

Peck said the country's services deficit had rose from RM22bil in 1998 to RM29bil in 1999 in tandem with higher repatriation of investment income. "As such, we expect services deficit to widen further in 2000," he said.

The outlook for the country’s electronics and electrical sector remained bright as export demand still strong.

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