Malaysia's Sept Export Growth to Rebound Ahead of US Tariff Revision

KUALA LUMPUR, Nov 2 (Bernama) -- RAM Rating Services Bhd expects Malaysia’s export growth to temporarily rebound to 12.2 per cent in September, after the mild 0.3 per cent contraction in August. In a statement, the research house said the higher expectation was due to better demand from China for Malaysian intermediate inputs as Chinese firms rushed to fulfil front-loaded orders from the United States ahead of the latest round of American import tariffs imposed on China on Sept 24. RAM Head of Research Kristina Fong said to date, trade flow volatility was mainly driven by front-loading activities to protect against a significant escalation in production costs for businesses. “With this in mind, export performance is envisaged to wrap up the year in low gear, unless there is another unanticipated round of tariffs down the line,” she said. This expectation is also supported by the contraction in China’s manufacturing export orders in the last few months. The latest round of tariff revision emphasised on industrial products and manufacturing materials, which would reduce the average tariff for this basket of goods to 7.8 per cent from 10.5 per cent, with around 75 per cent of the items attracting a cut of between zero and four per cent. “Malaysia’s exports of these goods to China constitute only 0.4 per cent of our total exports, with no discernible comparative advantage in the production of this basket of goods. “As such, Malaysia’s export performance is not expected to be boosted by the latest tariff-liberalisation measures,” it added. In contrast to exports, import growth was expected to decelerate to 6.4 per cent in September (August: 11.2 per cent, without a boost from the tax-free window that has underpinned import demand in the last three months. Overall, September's trade surplus is projected to come in at US$3.19 billion (RM13.3 billion, US$1 = RM4.17). -- BERNAMA