COVID-19 supply chain disruptions repress trade growth

Published on 03 Mar 2020.

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RAM Ratings estimates Malaysia’s imports and exports contracted a respective 6.6% and 5.1% in January, resulting in a RM12.0 bil trade surplus for the month. This is largely due to seasonally subdued regional industrial activity during the lunar new year festivities, compounded by industrial disruptions arising from the COVID-19 outbreak.

Given that the number of global COVID-19 infections are still rising, the outbreak is expected to remain a drag on global trade in the near term. The severity of COVID-19 is exacerbated by the fact that China is both the epicentre of the outbreak and a central node in the global value chain. China is the second largest source of value-added in the world after the US; a respective 12.3% and 12.7% of global gross exports can be attributed to value-added generated in China and the US. 

Within ASEAN, Vietnamese exports are the most vulnerable given Vietnam’s significant reliance on China’s output. Some 14.1% of the former’s gross exports are attributable to value-added input derived from China, with the highest exposure recorded by machinery- and equipment-related exports. Malaysia comes next, with 7.7% of its exports relying on inputs from China. Much of Malaysia’s exposure centres on the electronics- and electrical-related sector, with 13.8% of its exported value consisting of Chinese-derived value-added input.


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Woon Khai Jhek, CFA
(603) 3385 2512

Media contact
Padthma Subbiah
(603) 3385 2577


About RAM Rating Services Berhad (RAM Ratings)

Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Registration of Credit Rating Agencies, 2011. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains. 


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Publication Date Published Category
Economic Insight: January 2020 Foreign Trade 03-Mar-2020 Economic Insight View PDF