Juwai IQI's Kashif highlighted that in 2021, the last year of Trump’s first administration, Malaysian exports to the United States reached US$56.2bil, a 27.3% increase from the previous year. — Reuters
KUALA LUMPUR: Donald Trump’s upcoming economic policies are expected to significantly impact Malaysia’s economy, with projections indicating that they could contribute RM19.7bil to the country’s gross domestic product (GDP).
Juwai IQI co-founder and group chief executive officer Kashif Ansari opined that Trump’s direction and goals are clear.
“We also have the record of the first Trump presidency as precedent, and we can deduct from the team he has selected for his cabinet.
“One key policy Trump is expected to enact is the extension and intensification of tariffs on Chinese goods,” he said in a statement yesterday.
Kashif said this would result in Chinese and international firms going even further than they have over the last eight years to shift manufacturing out of China and into South-East Asia.
He said this policy alone could contribute an additional one percentage point to Malaysia’s GDP over four years.
“A single percentage point increase in GDP works out to be an RM19.7bil increase in the size of the economy. To make that number more tangible, consider that it is equivalent to about 40% of the cost of the East Coast Rail Link,” he said.
The International Monetary Fund or IMF projects that Malaysia’s 2024 GDP will be US$440bil, of which 1% of that total is US$4.4bil, equivalent to RM19.7bil at current exchange rates.
Kashif highlighted that in 2021, the last year of Trump’s first administration, Malaysian exports to the United States reached US$56.2bil, a 27.3% increase from the previous year.
By that year, Malaysia was exporting US$41bil more to the United States than it was buying from that country, one-third more than the year before.
“During the years of Trump’s first presidency, Malaysia’s economy grew annually by 5.8% in 2017, 4.8% in 2018 and 4.5% in 2019, before contracting in 2020 because of the pandemic,” he said.
The Trump tariffs on Chinese goods also drove billions of ringgit of investment into Malaysia and made it a key player in the “China Plus One” strategy.
This is where companies move manufacturing outside of China to avoid steep US tariffs on Chinese goods.
That investment kept growing during the Joe Biden years.
By 2023, China and Hong Kong foreign direct investment totalled US$3.4bil annually.
This was triple the level of 10 years earlier.
Kashif cautioned that there are risks and rising inflation in the United States could push interest rates higher.
“That could draw capital from Malaysia in the expectation that it will earn higher returns in the United States.
“It could also drive up the US dollar, raising costs and reducing export competitiveness for Malaysian manufacturers who depend on imported equipment,” he added. — Bernama
