KUALA LUMPUR, Dec 4 — RAM Rating Services Bhd expects Malaysia’s exports to grow at 10.8 per cent in October 2018.

This is as global value-chain activities will likely be sustained by front-loaded orders, amid greater concerns (up until the recent announcement on Dec 1), over the rise in US tariff rates on US$200 billion of Chinese imports that had earlier been scheduled to take effect on Jan 1 next year.

The rating agency said the slated increase has now been put on hold following recent talks between President’s Donald Trump and Xi Jinping at the G20 Summit in Buenos Aires, Argentina, with both parties having agreed to a 90-day truce to allow time for fresh negotiations.

"Although this pauses an escalation of the trade war for now, uncertainties still cloud external demand prospects. As such, the current front-loaded demand momentum could taper off temporarily in the lead-up to the end of the 90-day window next February,” Head of Research, Kristina Fong said.

RAM Ratings said in line with the sustained external demand, Malaysia’s import growth is expected to accelerate to 6.4 per cent in October, while the overall trade surplus is projected to come in at RM14.3 billion.

Meanwhile, the rating agency said Malaysia remained as an attractive destination for foreign direct investments, despite the global volatility and uncertainty, as underlined by the increase in investment approvals in the first half of this year, which should help stimulate more industrial activities and export growth over the longer term.

"Malaysia is also among the potential prime beneficiaries of the ongoing US-China trade war given its competitiveness in terms of revealed comparative advantage in semiconductors and chemicals, which have been hit by the tit-for-tat actions between the two economic giants,” it added. — Bernama