This article first appeared in The Edge Financial Daily on October 4, 2018

KUALA LUMPUR: Malaysia’s exports growth likely slowed to 5.7% in August compared to a year ago, down from 9.4% in July, according to a poll of 11 economists by Reuters.

Their growth estimates, however, ranged widely; from as low as 2.6% and as high as 9.2%.

The poll showed imports were forecast to rise 10.1% in August from a year earlier, which would be down marginally from the 10.3% growth seen in July. The country’s trade surplus is expected to widen to RM9 billion in August, from RM8.3 billion in July.

In a statement, credit rating agency RAM Rating Services Bhd also forecast that Malaysia’s exports growth will decelerate in August. It estimates a 3.3% growth, as the sale of goods abroad starts to slow on the back of a more cautious sentiment amid escalating trade tensions between the US and China.

While RAM noted Malaysia is among countries expected to benefit from the trade diversion effect of the tariffs imposed by the two economic giants — with the biggest potential gain seen in the electrical and electronic (E&E) products space — competition from other markets in the region may dilute some of the potential gains.

“Electronic components under both US and China’s set of tariffs, respectively, constitute 6.8% and 16.4% of Malaysia’s overall exports, with correspondingly strong RCAs of 1.38 and 1.50,” said RAM’s head of research Kristina Fong, referring to the country’s Revealed Comparative Advantages to benefit from the second round of US tariffs (imposed on Aug 23) on China, which places heavier focus on semiconductors.

That said, Fong noted markets like Vietnam and the Philippines have higher RCAs for this group of products. E&E products constituted 36.7% of Malaysia’s total exports in 2017.