KUALA LUMPUR: Malaysia is set for another commendable trade journey this year, although the value is not expected to be as high as the record-breaking RM2.2 trillion last year, economists said.
They expect total trade of around RM1.5 trillion this year, amid rising geopolitical uncertainties and spread of Omicron variant, and despite a solid start in January.
Malaysia's total trade jumped 24.8 per cent to RM203 billion in January, said the Statistics Department. The amount comprised RM110.7 billion in exports and RM92.3 billion in imports.
Last year's remarkable trade performance - which saw exports hitting RM1.24 trillion to achieve 99 per cent of the 12th Malaysia Plan 2021-2025 export projection, four years ahead of the target - was partially fuelled by higher exports of rubber products such as gloves.
But since the last quarter of 2021, Malaysia's rubber glove manufacturers saw their supernormal profits in the past two years waning as average selling prices markedly dropped amid stiffer competition.
Industry observers said the escalating Russia-Ukraine conflict posed fresh risks to global supply chains.
Moody's Investors Service cautioned that the continued supply chain disruptions would weigh on economic activity.
Still, IQI Global chief economist Shan Saeed said it continued to stand buoyant on Malaysia's trade and commerce landscape as the government was committed to having solid growth to improve the economic confidence among local and global investors.
"We expect trade numbers to meander around RM1.3 trillion to RM1.5 trillion in 2022," Shan told the New Straits Times today.
"Full credit goes to the International Trade and Industry Ministry and Malaysian Investment Development Authority. They have done an excellent job to maintain the momentum for the economy.
"This reflects the ministry's strong global relationship and solid brinkmanship in the global trade and commerce market," he added.
Shan said Malaysian goods and services were in high demand in China, Asean, Europe and teh United States.
"Malaysian products like commodities, manufacturing, ICT and gloves remain in very high demand globally. Most of the global players are looking towards the country due to its economy opening up because of effective vaccination strategy, macroeconomic stability, productive labour force, strategic geography and solid infrastructure," he added.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid believes the downside risks to the external trade had become elevated following the military conflict in Ukraine.
"At the current juncture, we are unsure to what extent the military agression will evolve but the recent bombings nearing Poland borders will give rise to the risks of the possible retaliation from the NATO member states.
"What it means is that the possible disruption to international trade is quite likely should the conflict evolve into a bigger scale that would result in further friction in the major economies super power such as the US and China."
Afzanizam added that China's commitment towards Zero Covid Strategy could also impede the strength of global recovery as it could abruptly affect the international trade.
"In 2021, Malaysia's export was growing at a double digit pace of 26 per cent. Given the high base effect, the country's export growth could be in the single digit this year," he said.
Source: https://www.nst.com.my/business/2022/03/780464/malaysias-trade-performance-stay-strong-say-economists