Shipments by export-dependent Malaysia slipped in October as demand from the increasingly important Chinese market dropped sharply, the government said today.

Total exports contracted 3.2 percent year-on-year as the lower shipments to China removed a buffer that has helped shield Malaysian trade from the impact of the eurozone troubles.

October exports by South-East Asia’s third-largest economy were valued at RM61.29 billion (US$20.08 billion), down from RM63.35 billion in October 2011, the trade ministry said in a statement.

container cargo ship 260209 Shipments for the first 10 months of the year were 1.1 percent higher, at RM586.79 billion, mostly supported by regional markets in Asia.

Exports to other South-East Asian countries rose 8.9 percent in October to RM17.2 billion - making up about a third of the total - with Singapore the top destination.

However, exports to China fell 15.3 percent to RM7.16 billion on lower shipments of agricultural goods such as palm oil and crude rubber, while exports of refined petroleum products and liquefied natural gas rose.

China has emerged as an increasingly important export destination for Malaysia, unseating Singapore in 2011 as the top market.

Selena Ling, head of treasury, research and strategy at OCBC Bank in Singapore, said Malaysia’s performance was in line with regional markets.

“The (region’s) trade picture actually continues to deteriorate,” she said.

“We may not get a turnaround until 2013. It’s going to be a gradual recovery story.”

Shipments to the European Union in October fell 14.2 percent to RM5.57 billion, while those to India dropped 7.3 percent to RM2.51 billion.

Exports to the United States, however, rose for the sixth straight month, up 11 percent to RM5.55 billion on sales of electrical and electronic products.

Imports for October stood at RM51.71 billion, up 5.7 percent from the same month last year.

Resource-rich Malaysia relies heavily on exports of commodities such as palm oil and energy products, as well as electronics and other manufactured goods.

Its economy grew a better-than-expected 5.2 percent in the third quarter as domestic demand compensated for slowing exports, spurred on by government spending ahead of elections next year.

The government expects 5.0 percent full-year growth.

- AFP