Update: The current account surplus has further slipped to RM2.6bn in the second quarter of 2013 from RM8.7bn in the first quarter.
Meanwhile, the ringgit continues to weaken against the US dollar, moving in the opposite direction of analysts’ predictions that it would strengthen to 3.00 by the end of the year. So much for upbeat predictions.
Original post (8 August 2013)
Malaysia’s current account, which mainly reflects the net surplus or deficit in external trade of goods and services, fell to RM8.7bn or 3.7 per cent of GDP in the first quarter of 2013.
This was lower that the fourth quarter 2012 balance of RM22.9bn or 9.4 per cent of GDP.
The figure was also lower than the first quarters of 2011 (RM25.4bn) and 2012 (RM16.9bn).
Earlier, the current account balance had plunged from RM102.4bn in 2011 to RM57.3bn in 2012, suggesting that there could be long-term structural vulnerabilities in our external trade.
The local press noted that exports in June 2013 had shrunk by 7.4 per cent from a year ago. It was the fifth successive drop, mainly due to sluggish demand from the developed nations and China for electronic and electrical products (which make up a third of Malaysian exports) especially integrated circuits and palm oil. Exports were down 3.8 per cent for the first six months.
Bloomberg surveys expect the current account surplus to slide to 6 per cent of GDP this year, down from 6.1 per cent in 2012 and 12 per cent in 2011 – though still higher than the average of 2.8 per cent for Asian countries and 2.4 per cent for China.
The structural vulnerability of Malaysia’s current account has been cited by some as one of the reasons for the weaker ringgit. Since 1 August, the ringgit has weakened further to over 3.25 yesterday – an almost 6 per cent weakening since the start of the year.