Full-blown US-China trade war will slow Malaysia’s export
A US flag is tweaked ahead of a news conference between US Secretary of State John Kerry and Chinese Foreign Minister Wang Yi at the Ministry of Foreign Affairs in Beijing January 27, 2016. — Reuters pic
“The US might continue imposing a tariff to all Chinese export and Beijing would retaliate. The supply chain will be impacted, not only in those two countries but the global trade as a whole. However, he expected that domestic demand would continue to hold up and remain supportive of the Malaysian economy and its Gross Domestic Product growth.
“The guidance from the International Monetary Fund , if the global trade tension escalates, the drag on global GDP would be 0.5 percentage point. Assuming today, that we are looking at 3.6 per cent global GDP growth in 2020, an 0.5 percentage point would drag global GDP to 3.1 per cent is very near to global recession level,” he explained.
“However, we are of the view that there would be some form of compromise between the two leaders , where a certain memorandum of understandings would be announced,” he said. The current account according to him, would not drop to the deficit but it would be narrowed, hence putting pressure on the ringgit and the country’s reserve position, but the economist also emphasised with Malaysia’s well-diversified export, it is unlikely the case.
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