RAM Ratings expects Malaysia’s imports and exports to be lifted a respective 3.9% and 1.7% in December 2019, resulting in a RM9.5 bil trade surplus for the month.
The rating agency said this contrasts against respective declines of 3.6% and 5.5% the preceding month.
“The better showing was achieved despite subdued global demand, which has been affecting Malaysia’s trade performance,” it said in a statement today (Jan 31).
RAM Ratings said Malaysia’s exports to China could be at risk given that the latter’s commitment includes about 83% of goods that it currently imports from Malaysia.
“Moreover, 12.7% of China’s imports from Malaysia comprise the committed items in which the US has a revealed comparative advantage (RCA),” it said.
It said this might shift demand away from Malaysia in favour of more competitive American manufacturers.
“Under this scenario, the items most at risk would be liquefied natural gas and naphtha due to their sizeable share of Chinese demand, as well as the US’ notable competitiveness in production,” it said.
RAM Ratings said a swing in US exports to China might induce the former’s trade partners to seek alternative suppliers if their orders are not met promptly, with Malaysia still potentially standing to benefit. – Jan 31, 2020, Bernama
