Malaysia expects to post strong trade growth in 2006 on the back of a robust world economy despite an appreciation of the local currency, the ringgit, a senior trade minister said today.

International Trade and Industry Minister Rafidah Aziz said the ringgit's appreciation was expected to have a minimal impact on importers and exporters.

"They have seen bigger fluctuations in the ringgit during the Asian crisis. The changes now are minimial and traders have been able to factor in these changes," the Miti minister told reporters.

Over recent weeks, the ringgit has strengthened to 3.72 against the US dollar, compared to around 3.77.

Earlier, Rafidah announced Malaysia's trade performance for 2005 and the outlook for 2006. Malaysia's total trade continued on an upward momentum, hitting RM967.8 billion (US$262 billion) in 2005, up 9.9 percent from the previous year.

"This trend is expected to continue, and total trade should breach the one trillion ringgit mark this year," Rafidah said.

Rafidah said Malaysian exports are expected to remain robust in 2006 on the back of 3.2 percent projected growth for the world economy by the World Bank.

"Global trade for 2006 is forecasted to grow at seven percent, compared with 6.2 percent in 2005," she said.

Positive trade balance

Malaysian exports in 2005 continued to be robust, growing 11 percent to RM533.8 billion. Meanwhile, imports were up 8.5 percent at RM434 billion.

As a result, the trade surplus widened to RM99.8 billion, up 23.7 percent from RM80.7 billion in 2004.

The 2005 trade surplus also marked the eighth consecutive year that Malaysia had a positive trade balance since November 1997.

Miti said the highest monthly total trade for 2005 was recorded in December, valued at RM89.6 billion when exports rose 13.9 percent to RM49.5 billion and imports rose by 15.1 percent to RM40.1 billion.

Miti also said Malaysia's export growth of 11 percent in 2005 was higher than the world's merchanside exports growth of 6.5 percent estimated by the World Trade Organization for that year.

The main drivers in 2005 for exports were positive economic expansion in the industrialized and developing economy, and strong external demand from the global recovery of electrical and electronics.

Growth in exports to major markets especially the US and Asean, and markets in the Middle East, South Asia, and Latin America contributed to the rise.

Additionally, the rising average price of crude to US$56.5 per barrel in 2005 from US$41.4 in 2004, boosted Malaysian export earnings.