How Trade War Affect Malaysia

As for malaysia there has been limited direct economic impact from the trade war although the second round effect is being felt by myr and other em currencies.

How trade war affect malaysia. Bloomberg economist maeva cousin s analysis. The escalation of the us china trade war could add more risks to the global economy including malaysia due to supply chain factor said analysts. Second and more directly because china is malaysia s most important trade partner. The international monetary fund imf may have identified china as having more to lose in the us china trade war but the real loser is the world which has become economically more dependent on china.

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. It was argued that trade liberalisation opened up markets and promoted export through the natural workings of comparative advantage. As a small open economy malaysia will inevitably be aff ected by the escalating global trade tensions. With total trade amounting to 131 of gdp3 malaysia would be primarily aff ected via the trade channel.

First because it affects global markets and the resulting global demand for malaysian exports. Malaysia is among the countries at risk of suffering the worst effects of the ongoing trade war between china and the us according to bloomberg. This means the malaysian economy could in turn lose up to 0 7 percentage points. The report also pointed out that a 10 drop in global growth would reduce malaysia s gdp by a whopping 14.