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US-initiated trade tensions impact Southeast Asia: report

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Escalating trade tensions initiated by the United States have affected Southeast Asian countries in a trickle-down effect and could significantly impact Malaysia's manufacturing, a Malaysian economic report on Monday said.

The report, compiled by Bank Islam Malaysia Berhad (BIMB) Securities Research, said it remained cautious on Malaysia's second-half outlook, given recent signs of a more protracted trade tussle between the United States and China, and slower forward-looking indicators.

The US-initiated trade tensions could have a significant impact on Malaysia's manufacturing, particularly in the electric and electrical sector as well as machinery products due to the global supply chain exposure.

"Given the cloudy start to the second half, we are maintaining Malaysia's full year exports projection at 6.3 percent year-on-year. We believe that there are more downside risks on the horizon," the report said.

Last Friday, Department of Statistics, Malaysia announced Malaysian exports rose 7.6 percent year on year to 78.66 billion ringgit (19.3 billion US dollars) in June, with growth in the manufacturing sector offsetting the huge decline in agriculture as well as the mining sector.

According to the report, regional trade started to feel the trickle-down effects from the trade spat.

Thailand's export growth fell 8.2 percent year on year to 21.8 billion US dollars in June, from the 11.4 percent recorded in the previous month. The slowdown was said to be mainly the result of deceleration in industrial exports.

Indonesia also recorded slower exports growth of 11.5 percent in June.

Singapore registered much weaker-than-expected non-oil domestic exports, growing by merely 1.1 percent year on year in June compared with 15.5-percent growth in May.

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