Malaysia’s export growth to accelerate to 8.7% in June — RAM

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KUALA LUMPUR (Aug 1): Malaysia’s export growth is expected to pick up to 8.7% in June from 3.4% in May despite the envisaged slowdown amid the Hari Raya festive season, RAM Rating Services Bhd said today.

In a statement today, the rating agency said steady demand from key export markets is anticipated to support June’s export growth, as signalled by the continued improvement in their industrial activity.

"In line with the projected acceleration in exports, which is usually accompanied by an uptake of imported inputs, import growth is envisaged to also rise to 8.1% in June," it noted.

RAM head of research Kristina Fong said re-stocking activities may appear quite resilient at the moment due to sustained global growth, but there seems little impetus to ramp this up significantly in the coming months amid the uncertainty over the current intertwining trade disputes.

"Overall, the trade surplus is projected to come in at RM11.1 billion for the month," she added.

Meanwhile, China’s import liberalisation (decreasing import tariffs on 1,449 consumer products) from July 1 is expected to offer more opportunities to global exporters of consumer goods, said RAM.

In its fifth round of tariff cuts since 2015, around 60% of the consumer goods listed by China will now be subject to at least an 8% reduction in import tariffs.

China has also lowered import tariffs on vehicles to 15% from 20%-25% and automotive parts to 6% from 8%-25%.

RAM said however, this import liberalisation is unlikely to result in direct substantial benefits to Malaysia’s export growth as both its export exposure to this basket of goods and comparative advantage in production are low.

"Malaysia’s exports of this basket of goods with liberalised tariffs constituted 8.6% of its overall exports in 2017, with
those heading to China comprising only 0.3% of its total exports," it said.