RAM expects Malaysia’s trade growth to recover in March

RAM Ratings expects Malaysia’s trade growth to recover in March, with export and import growth rebounding to a respective 2.5 and 2.9 per cent a er the preceding month’s declines.

Trade activity had been more subdued in February amid the lunar new year festivities, compounded by an already short working month, RAM said in a statement yesterday.

“That said, the pace of expansion is expected to remain lacklustre amid more muted industrial activity growth in key regional markets, coupled with businesses’ caution while awaiting further clarity on the direction of the US-China trade dispute.

“Malaysia’s overall trade surplus is anticipated to come in at RM14.8 billion in March,” it said.

The rating agency said that the US and China have been engaged in trade negotiations since the start of the year, in search of a solution to the protracted trade war between them.

“Details are scant at the moment, but a deal will most certainly entail China’s commitment to increasing its purchases of American goods to narrow its trade surplus with the US. This may lead to another round of disruptions in trade flows as China’s demand for goods from existing regional suppliers is diverted away to US producers.

“Initial talks in January had led to China agreeing to raise its imports of American agricultural, energy and industrial/ manufactured goods,” it said.

RAM’s head of research Kristina Fong said based on RAM’s initial assumptions on how this potential deal could turn out, the most significant impact on Malaysia would be the diversion of China’s demand for electrical and electronic goods to the US.