RAM: Trade outlook severely impacted by pandemic

KUALA LUMPUR: Malaysia’s exports is estimated to have surged 16.3 per cent in February, boosted by low-base effects and the front-loading of orders amid fears of global supply-chain disruptions due to the Covid-19 pandemic.

The same trend is observable for key regional economies, observed RAM Ratings Bhd (RAM) in a statement yesterday. Malaysian imports are also estimated to have accelerated in February, albeit at a slower pace of 1.4 per cent, resulting in a trade surplus of RM21.2 bilillion.

“The onslaught of Covid19 paints a gloomy picture for overall global growth and trade prospects, as numerous epicentres have emerged throughout the world,” it said.

“These include major European economies and the US, which has since emerged as having the highest number of Covid-19 cases.

“The American economy - the world’s biggest - is both a key supplier of value-added and large consumer of global output.

Within Asean, RAM saw that Singapore’s exports are the most vulnerable to American supply disruptions.

“Some 5.9 per cent of the island state’s gross exports derives value-added input from the US,” it added. “This comes ahead of Malaysia’s 3.8 per cent. On the demand side, the Philippines and Vietnam have the biggest exposures, with a respective 21.3 and 21.1 per cents of their total exported value-added consumed by the US.

“This is significantly higher than the Asean-wide average of 15.4 per cent and Malaysia’s 14.3 per cent.”

Given the scale of the pandemic and the time needed to contain it, what had once been perceived as primarily a China-centric supplychain disruption has turned into a worldwide issue.

As such, RAM believes that global trade will face prolonged and severe weakness in 2020.