PETALING JAYA: Malaysia’s exports are expected to decline 0.6% in September, while imports will likely see a 0.4% contraction, bringing the overall trade surplus to RM15.3 billion, said RAM Ratings in a note today.
The ratings agency said the lacklustre showing was underlined by the subdued global trade and industrial performance seen in September.
It also pointed out that a further downside risk had emerged following recent reports that India may consider imposing trade curbs against Malaysia amid the already challenging global landscape.
As Malaysia’s eighth largest export destination, goods heading to India increased 7.1% in 8M2019, against the overall 0.4% contraction in exports.
Although India only makes up 3.6% of Malaysia’s total exports, the strong growth had helped offset some of the deceleration in overall external demand this year.
“India was also the second biggest contributor to Malaysia’s export growth in 8M 2019, with a positive contribution of 0.3 percentage points and marginally behind the US (0.4 percentage points),” said RAM’s head of research Kristina Fong.
Malaysia’s current healthy export momentum to India may be significantly dampened if there are restrictions against the import of Malaysia’s palm oil-related products, the note stated.
“This is because palm oil is the biggest contributor to the overall rise in demand from India this year. Exports of palm oil to India jumped almost 70% in 8M2019, with a positive contribution of 11 percentage points,” it said.
RAM Ratings said the palm oil industry is also particularly vulnerable to trade measures by India given the significance of the latter as an export destination.
“The palm oil sector, along with the metals industry, stand to lose the most as exports destined for India comprised a respective 10.4% and 10.8% of these sectors’ total exports in 2018,” it added.
source https://www.thesundaily.my/business/malaysia-s-september-imports-exports-expected-to-decline-ram-AY1562233
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