Slower Singapore Economy May Have Domino Effect on Malaysia
MALAYSIA’S economy remains resilient despite risk it may indirectly be impacted in tandem with the weaker China and Singapore economies as trade issues take a toll on global growth momentum.
Sunway University economics Prof Dr Yeah Kim Leng (picture) said the slowing economy of the republic could have knock-on effects on Malaysia’s external demand, particularly in the upper-middle technologically advanced electrical and electronic (E&E) products.
However, Yeah said Malaysia’s diversified markets and economy — together with strong domestic consumption — would offset any downside risks from Singapore or the overall US-China trade tensions.
“Malaysia’s external demand could slow down in tandem with falling exports from Singapore or China, but it will not be as severe because our economy is diversified and has strong domestic demand, as shown by recent indicators,” Yeah told The Malaysian Reserve (TMR).
Singapore’s GDP declined an annualised 3.4% in the second quarter (2Q) compared to a 3.8% growth rate achieved in the first three months of the year.
The island republic’s manufacturing sector fell an annualised 6% in the quarter, while construction dropped by 7.6% and the services industry decreased by 1.5%.
Market observers pointed to the trade war as part of the root cause, as the heavy-reliant export nation saw a cooling demand of its high-end E&E goods from China and the US.
China’s growth had slowed to its weakest pace since quarterly data began in 1992, despite monthly indicators showing signs of stabilisation.
GDP at the world’s second-largest economy rose 6.2% in the April-June period from a year ago, compared to a 6.4% expansion in the 1Q.
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