Xinhua News Agency, KUALA LUMPUR, April 29 (International observation) The strong growth of Malaysia's foreign trade is optimistic about the RCEP-driven prospects

　　Xinhua News Agency reporter Mao Pengfei

　　A recent World Bank report showed that Malaysia’s economy is expected to grow by 5.5% this year, driven by a recovery in domestic demand, rising exports and the reopening of borders.

At the same time, the latest official data from Malaysia showed that the country's foreign trade grew strongly in the first quarter, with a year-on-year increase of 23.6%.

　　Analysts believe that, as an economy with a high degree of dependence on foreign trade, Malaysia's foreign trade performance has been outstanding, releasing an optimistic signal of economic recovery.

However, factors such as the Russian-Ukrainian conflict, the Fed's interest rate hike and the impact of the new crown epidemic on the supply chain have brought more external risks. Malaysia should seize the new opportunity of the Regional Comprehensive Economic Partnership (RCEP) to inject new impetus into the economic recovery.

Outstanding foreign trade performance

　　According to the latest statistical report of the Ministry of International Trade and Industry of Malaysia, Malaysia's foreign trade volume rose rapidly in the first quarter of this year, reaching 624.86 billion ringgit (US$1 is about 4.36 ringgit), a year-on-year increase of 23.6%, of which exports increased by 22.2% and imports increased. 25.2%; the trade surplus increased by 10.9% to 65.08 billion ringgits.

　　The rapid growth in exports was mainly supported by exports of electronic products, petroleum and chemical products, the report said.

In the first quarter, exports of agricultural products, mainly palm oil and related manufactured products, increased by 49.8% year-on-year to 27.22 billion ringgit; mineral exports, mainly crude oil and liquefied natural gas, surged by 58.9% year-on-year to 24.41 billion ringgit.

　　Statistics show that China remains Malaysia's largest trading partner, which is also an important driving force for the recovery of Malaysia's foreign trade.

In March 2022, Malaysia-China trade achieved double-digit growth for 16 consecutive months.

　　According to the World Bank, Malaysia is an open economy with an average foreign trade scale of 130% of GDP since 2010.

Openness to trade and investment is an important way for Malaysia to create jobs and boost incomes, with about 40% of employment related to export activities.

RCEP brings new opportunities

　　According to statistics from the Malaysian government, trade between Malaysia and RCEP members achieved rapid growth in March. Among them, the trade volume with other ASEAN member countries increased by 37.6% year-on-year to 65.78 billion ringgit, and the trade volume with Japan increased by 16.7% year-on-year to 16.1 billion ringgit Special; the trade volume with China, South Korea, Australia and New Zealand has achieved substantial growth.

　　Malaysian analyst Azmi Hassan believes that the RCEP officially came into effect for Malaysia on March 18, and the government should speed up its pace to further eliminate non-tariff barriers and reduce trade costs to promote foreign trade development.

　　Hassan told Xinhua that the RCEP members include China, Japan, South Korea, Australia and other large economies, which will contribute to the economic development of Malaysia.

　　Recently, the Malaysian business community held a series of RCEP-themed forums.

Zhang Min, president of the Malaysian Chinese Enterprises Chamber of Commerce, told reporters a few days ago: "The Malaysian government has taken RCEP as a major opportunity for economic recovery in the post-epidemic era."

Increased external risk

　　Although the foreign trade situation in the first quarter was gratifying, Malaysian economic observer Carmelo Ferlito believes that the government needs to take measures to ensure the stability of the domestic economic situation and achieve sustainable recovery, and provide a more friendly business environment for domestic and foreign investors.

　　He suggested that the government further ease restrictions on the labor market, introduce appropriate stimulus policies and tax reforms, implement a gradual spending reduction plan to curb inflation, and avoid further loose monetary policy.

　　The World Bank report warned that Malaysia's economic growth could slow to 4.8 percent if the global economic situation deteriorates amid the Russian-Ukrainian conflict, tightening U.S. monetary policy, and the outbreak's impact on supply chains.

Among them, the US monetary policy will have a direct impact on Malaysia and other countries that rely on short-term capital flows. A 25 basis point interest rate hike by the Federal Reserve may reduce Malaysia's economic growth rate by 0.4 percentage points.

　　Bank Negara Malaysia (Central Bank) Governor Nur Shamsiah Mohd Yunus said recently that the country's monetary policy is still suitable for current economic growth and inflation expectations.

Malaysia is bracing for challenges ahead, with inflation expected to be between 2.2% and 3.2% this year.

　　Bank Negara Malaysia said at the end of March that the Malaysian economy will continue its recovery momentum and is expected to grow by 5.3% to 6.3% this year, supported by continued expansion of external demand, the reopening of borders, an improvement in the labor market and a boost from the budget.