No recession fears in Malaysia amid trade war, says Bank Negara’s economics director

26-Jul-2019 Intellasia | Malay Mail | 6:02 AM Print This Post

Malaysia’s inherent strengths, including a resilient economy and diversified exports portfolio, would help the country weather the challenges caused by rising trade tensions, said Fraziali Ismail, director of economics department at Bank Negara Malaysia.

He said the country’s growth outlook would face external headwinds as trade tensions are likely to persist.

Based on the central bank’s assessment of a potential recession, he said there would be no such downturn in Malaysia next year, but the country must stand ready and remain vigilant of risks at all times.

“The recession fear in the market is overplayed, just moderate growth.

“I think a nimble policymaking is crucial for Malaysia to stand ready in facing the impact of trade tensions and pursuing any opportunities that arise,” he said during an engagement with media on “US-China Trade War: Context and Implications” here today.

On trade diversion from the US-China trade spat, Fraziali said Malaysia has gained a 4.2 per cent and 4.6 per cent market share of the US and China’s imports respectively for selected products.

These selected products are tariffed goods in which Malaysia has a meaningful presence, and the country has experienced an increased share in the world’s two largest economies relative to each other between July 2018 and April 2019, he said.

The better results were secured during the period when the US imposed a series of trade tariffs on its trading partners, including China, India, Canada, Australia, Mexico and Turkey, he said.

“During the said period, China has lost 6.2 per cent market share of selected products in the US market, while the latter’s market share in the Chinese market has contracted by 2.5 per cent.

“For the US market, our gains were mostly in the tariffed electrical and electronics while for China’s market, our share rose mostly in the tariffed petrochemical products as well as oil and oil products,” he said.

However, for a prolonged trade war, Fraziali said trade diversion is not enough to offset the negative impact on growth from the rising tensions.

The trade war has forced several multinational companies to rebuild their supply chains in Asia as part of strategic actions to weather the impact of trade retaliation as well as uncertainty in the global market, he noted.

In Malaysia, an American computer memory and computer data storage producer, Micron Technology, has expedited its greenfield expansion in memory integrated circuits.

Meanwhile, Jabil Circuit Inc, a global provider of design, engineering manufacturing and supply chain solutions, has expanded its existing facility in Penang to cater for the production reroute.


Category: Malaysia

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