Russia-Ukraine conflict has minimal impact on Malaysia’s exports

Russia-Ukraine conflict has minimal impact on Malaysia’s exports

KUALA LUMPUR, Feb 25 (NNN-Bernama) — The escalating Russia-Ukraine conflict will pose risks to global growth due to inflation and further disruption of global supply, but it will benefit commodities-related counters and have a minimal direct impact on Malaysia’s exports.

MIDF Research said market reaction was expected but would stabilise as the conflict has no profound impact on the equities market so long as corporate earnings are unaffected.

“We maintain our FBM KLCI end-2022 target at 1,700 points for now as we expect the Russia-Ukraine conflict would engender limited macro and corporate earnings fallout to our region and Malaysia in particular,” it said in a research note Friday.

It said the geopolitical risk from the Ukraine-Russia tension has led to a further rise in the global commodity prices and for many countries, inflation has been one of the factors which could influence growth outlook.

This was mainly linked to the supply disruptions as a result of the global health crisis, which led to a shortage of labour and raw materials and logistical delays.

“As for further disruption in global supply, Russia is one of the major oil producers and also a major supplier of wheat, aluminium, palladium, nickel and other commodities. Ukraine plays a vital role in the global supply of rare gases, especially neon gas, which is used in semiconductor production.

“Together with rising prices, shortages of these commodities because of the heightened conflict will add to the disruptions in the global supplies of chips, machinery, equipment and even food,” it added.

However, the crisis has a minimal direct impact on Malaysia’s exports with the size of exports to both Russia and Ukraine only accounting for 0.4 per cent of Malaysia’s total exports in 2021.

The share has been the same (at 0.4 per cent of exports) even in 2015-2019 during the pre-pandemic period.

“Similarly, from the imports perspective, only 0.6 per cent of Malaysia’s total imports last year were sourced from Russia and Ukraine. Trade with Russia and Ukraine only covered approximately one per cent of Malaysia’s total trade last year. Consequently, the combined size of trade with Ukraine and Russia covered only 0.5 per cent of Malaysia’s total trade,” MIDF added.

— NNN-BERNAMA

administrator

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