* July exports -5.3 pct y/y vs Reuters poll +2.5 pct
* July imports -4.8 pct y/y vs poll f'cast -1.5 pct
* Trade surplus 1.9 bln rgt vs poll f'cast 4.3 bln rgt
* Exports to China -22.3 pct y/y, U.S. +4.1 pct, EU -2.0 pct
KUALA LUMPUR, Sept 7 Malaysia's exports suffered their biggest
slump in 15 months in July, signaling persistent pressure on the export-reliant
economy and raising the prospect of further monetary easing before year-end.
Exports from the Southeast Asian economy declined 5.3 percent in July from a
year earlier, data from the International Trade and Industry Ministry showed, a
sharp contrast to economists' estimates of a 2.5 percent annual rise. In June,
exports grew 3.4 percent.
Compounding matters were signs of tepid domestic demand, with imports
falling 4.8 percent on-year, sharply down from the previous month's 8.3 percent
The volatility in the monthly data may keep the central bank from cutting
rates again at its policy meeting later on Wednesday, following a surprise
25-basis-point easing to 3.00 percent in July.
A Reuters poll forecast Bank Negara Malaysia to stay its hand this
afternoon, but some analysts note growing risks of a further easing before
year-end, especially given the soft growth trend and weak sales to key trading
Malaysia, the world's second-largest producer of palm oil and a major
exporter of natural rubber, saw exports of both commodities drop 9.6 percent and
43.9 percent in July, respectively.
Annual exports of liquefied natural gas also tumbled 25 percent.
A weak spot was China, the country's biggest trading partner. Exports to the
world's second-biggest economy fell 22.3 percent in July, on lower shipments of
electrical and electronic products, petroleum products and natural rubber.
Brian Tan, an economist with Nomura, said a rate cut was more likely later
this year at the policy meeting in November.
"With the volatility between this month and the previous month's numbers,
it's not clear whether this is a structural trend. It's something we'll have to
monitor before we come to any conclusions about the country's growth
trajectory," he said.
HSBC economists are not ruling out a cut on Wednesday, especially as
economic growth has slowed for five straight quarters to the end of June 2016.
In the second quarter, Malaysia clocked up the slowest annual growth in
Exports to the U.S. rose 4.1 percent, driven by demand for optical and
scientific equipment, and palm oil and palm-based products.
July's trade surplus narrowed to 1.9 billion ringgit ($467.81
million)compared to 5.5 billion ringgit in June.
"Data released since that GDP report, while scant, do not suggest a
turnaround is imminent," HSBC economist Su Sian Lim said in a note.
($1 = 4.0615 ringgit)
(Reporting by Rozanna Latiff; Editing by Shri Navaratnam)