Malaysian central bank warns against downside risks posed by trade tensions

KUALA LUMPUR (Xinhua) – The Malaysian Central Bank on Friday warned against the downside risks posed by the United States (US)-initiated trade tensions to the country’s economy.

According to the central bank, influenced by the trade tensions, Malaysia’s export growth could be sliced by 0.5 to 0.8 percentage points this year.

There will be no winners if the current tensions turn into a global trade war, the central bank said.

According to the central bank’s quarterly bulletin, should the downside risks from the ongoing trade disputes materialise, Malaysia’s gross domestic product (GDP) growth could be reduced by approximately 0.1 percentage point in 2019.

“The prolonged trade disputes and the resulting impact on lower global trade has mainly affected Malaysia’s trade activity. Not only are Malaysia’s exports to affected countries lower (direct channel), exports to countries within the global value chain (indirect channel) have also been affected,” it said.

The bank also said the impact of the trade tensions on the global value chain is also not negligible, given Malaysia’s position as one of the most integrated economies in the global value chain.