Malaysia leading index declined further in 2023

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Leading index (LI) declined at the same pace of -0.2%yoy in Oct-23 (Sep-23: -0.2%yoy), marking the 8th month of contraction but the slowest fall since Mar-23. The small decline in LI mainly explained by the continued weakness in real imports of semiconductors , but limited by increases in the number of housing

Compared to earlier months, the drop wasn’t as severe. Another measure, the Coincident Index, showed slight improvement, largely due to increased retirement savings. Overall, there’s a gradual recovery after a tough start to the year.

Leading index decline

Exports fell sharper in Nov-23. Malaysia’s total trade declined for the 9th month in a row, falling by -2.4%yoy in Nov-23, mainly underpinned by a sharper fall in exports, in contrast to imports, which rebounded and registered the first annual growth after 8 months of contraction.

The weak exports also resulted in the trade surplus shrinking to RM12.4b, the smallest surplus in 3.5 years. Exports fell sharper by -5.9%yoy, extending the year-on-year contraction from Mar-23. The Nov-23 export performance was somewhat worse than expected due to weakness in E&E shipments as well as sharper fall in exports to major destinations like China and the US.

In November 2023, Malaysia’s exports took a big hit, decreasing significantly, especially in electronics. Total exports fell, notably to China and the US. Despite this, trade might pick up as neighboring countries perform better.

Additionally, Malaysia’s industrial output fell slightly in September 2023 but rebounded in October 2023. This was driven by increased oil and gas production, alongside better manufacturing and electricity generation.

The rise in demand, both domestically and internationally, contributed to this growth and might continue due to increased local and global demand.