KUALA LUMPUR: Malaysia’s diversified economy will provide the nation with a buffer from the impact of trade tensions between the United States (US) and China.
World Bank lead economist in macroeconomics, trade and investment Richard Record said the country exported products and services throughout the world.
“From what we can see, Malaysia has its strengths.
“The export numbers are increasing but at the expense of the US and China.
“However, despite gaining a bigger market share, the global economy is slowing down, which would mean less demand,” he said on the sidelines of the Malaysian Economic Convention here today.
However, he said amid the intensified trade tensions between the US and China, the economies of Malaysia and other emerging markets were expected to experience a slowdown.
“The escalating trade tensions between the two economic powerhouses have slowed down the global economy and demand, which will see Malaysia’s exports also decelerating because it is an open economy.
“Hence, it cannot be exempted from the global impact,” he added.
Earlier this month, the International Trade and Industry Ministry said in its monthly report that exports in April rose 1.1 per cent year-on-year (y-o-y) to RM85.2 billion, ending two successive months of y-o-y decline.
The ministry said it was the highest export value ever recorded for the month of April, boosted by rises in shipments of electrical and manufactured products, as well as refined petroleum goods.
In terms of attracting investment, Record said prolonged trade tensions, as well as the possibility of similar trade tensions involving the US and other economies such as India, would cause outflows especially in emerging markets.
“What we are seeing now is market volatility across the world, driven by the nervousness of investors worldwide due to the trade tensions.
“When this occurs, investors tend to retreat from the emerging markets,” he said.
US President Donald Trump and Chinese President Xi Jinping are expected to meet at the G20 Summit in Osaka on June 28 and 29, with analysts hoping the meeting will lead to a trade war truce between the two economic powerhouses.
Last week, foreign investors turned net sellers on Bursa Malaysia with outflows amounting to RM209.1 million against inflows of RM328.26 million in the previous week, while local retailers became net buyers, recording an inflow of RM69.9 million vis-a-vis an outflow of RM21.54 million. - Bernama