RAM Ratings expects Malaysia’s exports, imports to contract in october

03-Dec-2019 Intellasia | Malay Mail | 6:02 AM Print This Post

RAM Ratings expects Malaysia’s imports and exports to contract by 6.8 per cent and 8.2 per cent, respectively, in October, resulting in a trade surplus of RM14.4 billion for the month.

The ratings agency noted that the continued lacklustre showing was underlined by subdued global trade and industrial performance in October, along with high-base effects from 2018.

However, RAM Ratings head of research Kristina Fong said recent shipment trends for the semiconductor sector have shown signs that the pace of the decline might have bottomed out despite 2019 being a weak year for the sector.

“There are some bright spots for the electrical and electronics (E&E) sector, including falling inventory-to-shipment ratios for major regional tech exporters and also a gradual pick-up in orders.

RAM Ratings said the fruition of a preliminary US-China phase one trade deal was unlikely to spark an immediate revival in trade momentum as businesses will likely remain wary of the uncertainties looming over subsequent phases. (REUTERS)

RAM Ratings said the fruition of a preliminary US-China phase one trade deal was unlikely to spark an immediate revival in trade momentum as businesses will likely remain wary of the uncertainties looming over subsequent phases. (REUTERS)

“The rollout of new products in the tech space such as those related to 5G and the Internet of Things could also lend some support to this sector. All these factors should shore up the resilience of the E&E sector, a key export for Malaysia,” she said in a statement today.

Meanwhile, RAM Ratings said the fruition of a preliminary US-China phase one trade deal was unlikely to spark an immediate revival in trade momentum as businesses will likely remain wary of the uncertainties looming over subsequent phases.

Additionally, the recent signing of a legislation supporting protesters in Hong Kong by the US may complicate future trade negotiations, it added.

RAM Ratings said given past flip-flops on both sides, more progress will be needed to revive business optimism and, consequently, any notable rebound in global demand.

The first phase of the US-China trade deal was also unlikely to reverse any realignment in supply chains arising from the dispute, added RAM Ratings.

Largely induced by the US’s more prohibitive trade barriers against China, major Asian exporters of E&E goods experienced a marked decline in their share of overall E&E exports to China.

As a consequence, regional distribution patterns have changed as producers have been trying to circumvent such barriers.

RAM Ratings said while some economies such as Taiwan have gone on to exporting directly to the US, some producers like South Korea and Malaysia have diverted their supplies to new production hubs in Vietnam and Taiwan.

https://www.malaymail.com/news/money/2019/12/02/ram-ratings-expects-malaysias-exports-imports-to-contract-in-Oct/1815279

 


Category: Malaysia

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