Covid-19 supply chain disruptions repress trade growth: RAM

KUALA LUMPUR: Malaysia’s imports and exports are expected to contract 6.6 per cent and 5.1 per cent respectively in January, according to RAM Ratings.

This will result in a RM12.0 billion trade surplus for the month.

RAM said this was largely due to seasonally subdued regional industrial activity during the lunar new year festivities, compounded by industrial disruptions arising from the Covid-19 outbreak.

“Given that the number of global Covid-19 infections are still rising, the outbreak is expected to remain a drag on global trade in the near term.

“The severity of Covid-19 is exacerbated by the fact that China is both the epicentre of the outbreak and a central node in the global value chain,” RAM said in a statement today.

China is the second largest source of value-added in the world after the US, a respective 12.3 per cent and 12.7 per cent of global gross exports can be attributed to value-added generated in China and the US.

Within Asean, RAM said Vietnamese exports were the most vulnerable given the country’s significant reliance on China’s output.

Some 14.1 per cent of Vietnam’s gross exports are attributable to value-added input derived from China, with the highest exposure recorded by machinery and equipment-related exports.

Malaysia comes next, with 7.7 per cent of its exports relying on inputs from China.

Much of Malaysia’s exposure centres on the electronics and electrical-related sector, with 13.8 per cent of its exported value consisting of Chinese-derived value-added input.

Source: NST