Published on 01 Aug 2018.
RAM Ratings expects Malaysia’s export growth to pick up to 8.7% in June (May: 3.4%), despite the envisaged slowdown amid the Hari Raya festive season. 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. “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,” highlights Kristina Fong, RAM’s head of research. Overall, the trade surplus is projected to come in at RM11.1 billion for the month.
China’s import liberalisation (decreasing import tariffs on 1,449 consumer products) from 1 July 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%).
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.
Woon Khai Jhek
(603) 7628 1093
(603) 7628 1162
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
© Copyright 2018 by RAM Rating Services Berhad