Risk Watch Malaysia at risk to China slowdown

by **Cals** Wed 02 Jul 2014, 23:24

Risk Watch Malaysia at risk to China slowdown

Business & Markets 2014

Written by Jonathan Gan of theedgemalaysia.com

Wednesday, 02 July 2014 15:30

KUALA LUMPUR (July 2): Malaysia is at risk to a slowdown in the Chinese economy, according to a report released by Moody Investors Services today.

Rahul Ghosh, Vice President and Senior Research Analyst at Moody Investor Services, said that Malaysia, like Vietnam, is exposed to a China slowdown as its exports to China contribute 9.8% to the country’s GDP.

“Both countries’ export baskets are also heavily weighted towards commodities, meaning that they would feel the twin impact of weaker Chinese demand and falling global commodity prices,” said Ghosh.

Ghosh added that the ASEAN region’s trade exposure to China has increased rapidly in recent years to 12.2% from 7.3% a decade earlier.

“China is now ASEAN’s largest trading partner, whereas ten years ago, it stood behind the United States, Japan and the European Union.

“Should we see a sharper downturn in Chinese economic growth in 2014 and 2015 than factored into our 6.5-7.5% baseline projection, this would have a significant bearing on ASEAN’s macroeconomic outlook,” Ghosh said.

It is worth noting that Singapore has the largest overall exposure to China as its exports to China in 2013 accounted for 16.4% of GDP versus a regional average of 7.9%.

Moody’s report echoes that by IHS Global Insight Chief Economist Rajiv Biswas released earlier.

Rajiv was quoted as saying by theedgemalaysia.com then that the impact of a China hard landing would be significant as exports to China accounted for a high share of the country’s total GDP.