How Trade War Affect Malaysia

The short answer is.

How trade war affect malaysia. Macquarie equities research mq research examined the potential impact of a trade war between us and china on malaysia in a report released yesterday. Alliance bank malaysia bhd chief economist manokaran mottain said malaysia could fall into a recession within the next two years if the trade war goes full blown next year. Malaysia s export profile will also be impacted by the state of the global electronics industry this year. A worsening trade war could drag down global output by 0 4 percentage points by 2020.

This means the malaysian economy could in turn lose up to 0 7 percentage points. With total trade amounting to 131 of gdp3 malaysia would be primarily aff ected via the trade channel. From the ricardo days of the 19th century when the theory and concept of comparative advantage was introduced by british economist david ricardo there was evidence that there were gains to be made from free trade. As a small open economy malaysia will inevitably be aff ected by the escalating global trade tensions.

The biggest losers would be countries that depend on trade for growth. It is possible to gauge the extent of trade diversion by comparing pre tariff and post tariff export performance using us census bureau data of us imports from the major exporting economies in the region. The report also pointed out that a 10 drop in global growth would reduce malaysia s gdp by a whopping 14. But can trade and investment diversion offset the overall negative impact of the trade war on malaysia.

When two elephantine economies fight in a trade war there can be no winners. The impact of trade tensions to the economy can be assessd via the trade income and investment channels. Consequently any trade policies that harm trade between these countries could affect malaysia s trading position especially since malaysia s intermediate goods exports to china are significant. Trade remains a major economic driver for malaysia with china and us placing second and third at 13 and 9 of nominal gdp respectively.

So far not really. It was argued that trade liberalisation opened up markets and promoted export through the natural workings of comparative advantage. Implications for malaysia the trump administration s america first agenda got it started on protectionism.