business

Malaysia’s export value, GDP to grow with trade pact, says HSBC

March 09, 2016

Analysts say Malaysia's demographics and geography can combine to give the country an advantage in the global market. – Reuters pic, March 9, 2016.Malaysia's participation in the Trans-Pacific Partnership (TPP) trade agreement will increase the country's export value by 20% per year over the next 10 years compared to the scenario where Malaysia sat out of the pact, according to HSBC.

HSBC senior trade economist Douglas Lippoldt said Malaysia could also add 7% to annual GDP growth upon the implementation of the TPP.

"Malaysia's favourable demographics and geography can combine to give the country an advantage in the global market, and I see the potential for Malaysia to diversify its range of suppliers (from joining the TPP). This can help Malaysia to move up the value chain," he told a media briefing today.

Lippoldt said openness to trade was the first step to achieving economic growth.

However, the problem for now is that developed countries' investments have been slashed by half from the previous recovery cycle.

Yet in developing markets, consumer spending is growing in the region of 7% to annual gross domestic growth, which shows there are pockets of opportunities lying in this region.

Lippoldt said the TPP and other trade agreements, such as the Regional Comprehensive Economic Partnership, that are coming online soon would become the catalysts to global trade.

Parliament on January 27 approved the country's participation in the 12-nation trade pact, where the Dewan Rakyat received 127 votes for the TPP against 84 opposing it. – The Edge Markets, March 9, 2016.