Analysts are concerned about the effects of the Ukraine crisis on trade
KUCHING: Analysts are concerned about the effects of war in Ukraine, high commodity prices and rising inflation on global demand, all of which could affect Malaysia’s trade performance.
For now, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained its projection of export and import growth of 16.9% and 19.2%, respectively, this year.
Despite the strong trade performance in May 2022, which saw trade grow a further 33.6% year-on-year to RM228.4 billion, MIDF Research estimated 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 the war in Ukraine, high commodity prices and rising inflation on global demand,” the research service said.
“We also view the slowdown in China as another downside risk, given the concern over the upsurge in Covid-19 infections and the negative effect of a strict lockdown.”
Overall, MIDF Research expects continued demand for electrical and electronic (E&E) products and products (such as palm oil and petroleum) to support exports in the coming months.
“While import growth will be sustained, as we expect consumers to continue to increase spending on the back of the economic reopening.
“Business spending will also increase in anticipation of improving demand and the positive impacts of further easing of Covid-19 restrictions.”
Meanwhile, RHB Investment Bank Bhd (RHB Investment Bank) pointed out that strong export growth from Malaysia is forecast for the coming months amid high commodity prices as well as robust demand for semi-finished products. -drivers.
Nevertheless, RHB Investment Bank is to some extent cautious due to risks of a potential impact of a global economic slowdown on Malaysia’s trade performance in the second half of 2022 (2H22).
“A gloomier global economic outlook would pose a downside risk to Malaysia’s economic growth and trade prospects,” the research firm noted.
“The ongoing development of geopolitical conflicts between Russia and Ukraine, the potential slowdown in major economies as well as the tightening of the financial situation present risks for a slowdown in global growth in 2H22.”