RAM Ratings says Malaysia’s export growth to remain strong despite trade war

By SHAZNI ONG / pic By TMR

Malaysia exports are forecast to grow 10.8% year-on-year in October despite the imposition of tariffs by the US on Chinese products, rating agency RAM Rating Services Bhd (RAM Ratings) said.

Global value-chain activities will likely be sustained by front-loaded orders amid greater concerns over the rise in US tariff rates — from 10% to 25% — on US$200 billion (RM830 billion) worth of Chinese imports scheduled to take effect on Jan 1 next year.

The rating agency added that the slated increase has now been put on hold following the recent 90-day truce announced at the Group of 20 summit in Buenos Aires, Argentina, to allow time for fresh negotiations.

RAM Ratings head of research Kristina Fong (picture) said although this pauses an escalation, uncertainties still cloud external demand prospects

“The current front-loaded demand momentum could taper off temporarily in the lead-up to the end of the 90-day window next February,” she noted in a statement yesterday.

Import growth is expected to accelerate to 6.4% in October, in line with the sustained external demand, while the overall trade surplus is projected to come in at RM14.3 billion.

RAM Ratings noted that Malaysia remains an attractive destination for foreign direct investment, despite the global volatility and uncertainty.

“This as underlined by the increase in investment approvals in the first half of 2018, which should help stimulate more industrial activities and export growth over the longer term.

“Malaysia is also among the potential prime beneficiaries of the ongoing US-China trade war given its competitiveness in terms of revealed comparative advantage in semiconductors and chemicals, which have been hit by the ‘tit-for-tat’ actions between the two economic giants,” the agency said.