KUALA LUMPUR: RAM Rating Services Bhd expects moderate trade growth in February due to subdued industrial activity during the lunar new year festivities and compounded by an already short working month.
In a statement, head of research, Kristina Fong said RAM Ratings projected export expansion to decelerate to 1.4 percent for the month under review, while imports contract to 3.3 percent, which would result in an overall trade surplus of RM12.1 billion for the month.
“Looking ahead, trade momentum is likely to moderate amid greater uncertainty and softening global demand, which will likely hit Malaysia’s electrical and electronics (E&E) sector the hardest, given that output is heavily dependent on foreign consumption.
“Some 88.8 percent of total value-added (VA) generated by the sector is exported, making it especially susceptible to weak global demand,” she added.
The exposure of Malaysia’s overall industrial output is also notable as 43.4 percent of the nation’s generated VA is to meet foreign consumption.
Moreover, a significant proportion of Malaysia’s total value-added export goes to the world’s three largest economies, namely China (20.1 percent), the United States (12.8 percent) and Japan (8.8 percent).
“As such, Malaysia’s exports and, in turn, gross domestic product momentum would be particularly vulnerable if there was to be a synchronised global downturn,” Fong said –Bernama
