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Exports to pick up in June, says RAM

August 1, 2018 1:14 PM
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PETALING JAYA: Malaysia’s export growth is expected to pick up to 8.7% in June from 3.4% in May on the back of steady demand from key export markets, while trade surplus is projected to stand at RM11.1 billion said RAM Ratings.

The increase is expected despite the slowdown envisaged due to the Hari Raya festive season – thanks to the continued improvement in industrial activity in key export markets.

“Restocking 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,” said RAM’s head of research Kristina Fong.

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,” she added.

China’s import liberalisation which includes decreasing import tariffs on 1,449 consumer products from July 1 onwards is expected to offer more opportunities to global exporters of consumer goods. 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 (from 20-25% to 15%) and auto parts (from 8-25% to 6%).

Fong opines that the 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.

Source: thesundaily.my

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