DJ UPDATE: Malaysia March Exports Rise 36.4%, Beat Forecast

By Elffie Chew Of DOW JONES NEWSWIRES

KUALA LUMPUR (Dow Jones)--Malaysia's exports rose in March at a faster-than-expected pace amid improving global demand, likely helping the economy grow more than 8% in the first quarter and reinforcing expectations of a rate hike this month, economists said.

Exports surged 36.4% from a year earlier to MYR59.44 billion ($18.58 billion), the highest since September 2008, the Ministry of International Trade and Industry said in a statement Tuesday. The median forecast of 15 economists polled by Dow Jones Newswires was for an on-year increase of 21.5%.

The ministry attributed the rise to a 32% increase in overseas shipments of electrical and electronic products, which account for almost 40% of the country's exports.

The strong reading ups the chances that the central bank will raise rates when it meets on May 13, analysts said.

HSBC Senior Asian Economist Robert Prior-Wandesforde predicted a 25 basis point hike this month and a further 50 basis points later in the year.

"The hikes may not even stop there, depending on whether (Bank Negara Malaysia) Governor Zeti feels the need to push rates above 'normal,'" Prior-Wandesforde said.

Exports of palm oil, liquefied natural gas, chemicals and chemical products, crude petroleum and refined petroleum products also posted an improvement, the ministry said.

On-month, March exports were up 26.9%.

Imports surged 45.3% to MYR45.09 billion due to higher shipments of intermediate goods, the ministry said. The median forecast was for a 28.9% expansion. From a month earlier, imports surged 28.2%.

The trade surplus for March was MYR14.35 billion, higher than February's MYR11.67 billion.

The better-than-expected rise in exports was in line with the regional trend, which bodes well for Malaysia's first-quarter economic growth, economists said.

Most economists are projecting Malaysia's gross domestic product to have grown 7%-8% in the first quarter. The country is expected to release the numbers in the third week of May.

The trade-driven economy expanded 4.5% from a year earlier in the last quarter of 2009.

-By Elffie Chew, Dow Jones Newswires; (603) 2026 1233; elffie.chew@dowjones.com