Trade expected to decline in February

PETALING JAYA: Malaysia’s export and import growth is expected to temporarily slide to 2% and 0.6% respectively in February 2018, leading to a trade surplus of RM9.8 billion, according to RAM Ratings.
The rating agency said in a statement that industrial activity is expected to have shifted to lower gear amid the lunar new year, which is a key holiday in Malaysia and its largest trading partners Singapore and China, compounded by an already short working month.
Furthermore, it said there was also evidence of some front-loading of shipments in January ahead of the holiday season, thereby moderating trade momentum in February.
“The dissimilar timing of the lunar new year in 2017, which had fallen in January as opposed to February this year, has also created a high-base effect for growth in February. The growth of exports and imports accelerated to a respective 26.6% and 27.7% in February 2017,” it added.
Meanwhile, RAM Ratings said US protectionist policy is not expected to exert a major impact on Malaysia’s export performance given the comparatively small share of American demand for steel and aluminium, which together made up a mere 0.1% of Malaysia’s overall exports in 2017.
Recall that last month, the US imposed hefty 25% and 10% import tariffs on steel and aluminium, respectively.
“A flurry of protectionist measures has been announced this year. They remain a key concern for Malaysia’s export resilience in 2018 given our status as a small, open economy.”