Mustapa: Maintaining 1H trade growth a challenge

The govt forecasts trade and exports growth to moderate in 2H17 due to weakening global demand


Maintaining the 22% trade growth recorded in the first-half of 2017 (1H17) is going to be a challenge during 2H17, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.

Mustapa said the government remains conservative in its trade forecast, including exports which was the primary force behind the country’s 5.8% gross domestic product growth in the second-quarter of 2017 (2Q17).

“On the trade front, the stellar performance in the first six months will be difficult to repeat in 2H17,” he told reporters after speaking at the Asia Business First Forum yesterday.

Mustapa said the government expects trade and exports growth to moderate in 2H17 due to weakening global demand.

“There is a lot of optimism in the air, but looking into 2H17, there are also uncertainties. Prices (of commodities) were good in the 1H, but are expected to decline in the 2H,” he said.

Mustapa said at the moment, the government is not revising its 2017 total trade growth target of 5%.

New forecasts might be announced by Prime Minister Datuk Seri Mohd Najib Razak during the Budget 2018 tabling in October, he said.

“There might be revised projections when the budget is presented. Until then, we are sticking to our existing numbers,” Mustapa added.

The 1H17 exports increased by 21% to RM451.05 billion, while imports rose by 23.3% to RM408.12 billion — resulting in a trade surplus of RM42.93 billion.

Malaysia’s total trade for the same period grew by 22% to RM859.17 billion.

Earlier, during his speech at the forum, Mustapa said the future of the Trans-Pacific Partnership Agreement (TPPA) will be decided during the Asia-Pacific Economic Cooperation Leaders’ Summit in Vietnam in November.

He said Malaysia remains open to options to bring the TPPA into force without the US.

The rest of the grouping members are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam.

“The TPPA would have brought about additional growth not only to Malaysia, but to the world as a whole,” he said.

The TPPA experience has strengthened Malaysia’s position to pursue regional and bilateral agreements with trading partners.

“With the TPPA hanging in the balance, the successful conclusion of the Regional Comprehensive Economic Partnership is important for future trade and growth in the region,” he added.

On Malaysia’s key to success, Mustapa said the country is now a net exporter of capital and has produced many globally competitive companies.

At the end of 2Q17, direct investment abroad stood at RM574 billion compared to RM557 billion in foreign direct investment.

“This proves that Malaysian companies have a strong presence globally,” he said, adding that there were over 1,000 active Malaysian companies with investments abroad.

He said a diversified economic and export structure, as well as the focus on infrastructure, have helped domestic businesses.

Mustapa also said Malaysia will continue to support multilateralism, despite prevalent anti-globalisation sentiments in some parts of the world.

He said it was one way for the country — which practises an open economy with a relatively small domestic market — to deal with the current global challenges and ensure long-term growth and stability.

“Malaysia continues to be pragmatic in its engagement with the rest of the world. We will continue to support the multilateral system and open regionalism.”