Analysts are concerned about the effects of war in Ukraine, high commodity prices and rising inflation on global demand, all of which may affect Malaysia’s trade performance. — Bernama photo
KUCHING: Analysts are concerned about the effects of war in Ukraine, high commodity prices and rising inflation on global demand, all of which may affect Malaysia’s trade performance.
For now, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) has maintain its projection for exports and imports to grow at 16.9 per cent and 19.2 per cent, respectively, this year.
Despite the robust trade performance in May 2022, which saw trade expanding further by 33.6 per cent y-o-y to RM228.4 billion, MIDF Research gathered that the stronger growth was also explained by the lower base in May 2020.
“On the external front, we are concerned about the effects of war in Ukraine, high commodity prices and rising inflation on global demand,” the research arm said.
“We also view the slowdown in China as another downside risk, given the concern over renewed surge in Covid-19 infections and the negative effect from strict lockdown.”
Overall, MIDF Research expects continued demand for electrical and electronics (E&E) products and commodities (such as palm oil and petroleum) will support exports in the coming months.
“While imports growth will be sustained as we expect consumers will continue to increase their spending on the back of economic reopening.
“Business spending will also increase in anticipation for improving demand, and the positive impacts from further relaxation of Covid-19 restrictions.”
Meanwhile, RHB Investment Bank Bhd (RHB Investment Bank) highlighted that sustained growth in Malaysia’s exports is anticipated for the next few months amid elevated commodity prices as well as robust demand for semiconductor products.
Nevertheless, RHB Investment Bank is to some extent cautious due to the risks of a global economic slowdown potential impact on Malaysia’s trade performance in the second half of 2022 (2H22).
“Bleaker global economic outlook would pose a downside risk to Malaysia’s economic growth and trade prospects,” the research firm noted.
“The unfolding development of Russia-Ukraine geopolitical conflicts, potential slowdown in major economies as well as tightening financial condition poses risks towards a slow-down in global growth in 2H22.”
