Malaysia set to benefit from US-China competition — Moody’s
05 Feb 2024
Malaysia is among Asia-Pacific countries that may benefit from the competition over trade and technology between China and the United States (US) which continues to disrupt supply chains, according to Moody’s Investors Service.
The credit rating agency said the ongoing US-China competition present opportunities for economies with strong manufacturing bases and good infrastructure, such as Malaysia (A3 stable), Vietnam (Ba2 stable) and Thailand (Baa1 stable).
“An escalation of military conflicts in the Middle East also poses supply chain risks,” it said in a research note today.
Moody’s said a downshift in China’s (A1 negative) economic growth rate and a cyclical slowdown in the US (Aaa negative) will weigh on Asia-Pacific’s credit conditions in 2024.
“Peaking inflation globally will provide space for monetary tightening cycles to slow, but financial conditions will remain difficult for the weakest rated issuers. Meanwhile, geopolitical risks will continue to shape business decisions,” it added.
Moody’s also forecast a structural shift in Asia-Pacific’s growth trajectory.
“We project the weighted average of real Gross Domestic Product growth for the 25 sovereigns in Asia-Pacific to decelerate to 3.6 per cent in 2024 from 4.4 per cent in 2023, reflecting the slowdown in China and broadly lacklustre global economic conditions, including the cyclical slowdown in the US,” it said.
The downshift in China’s growth trajectory, reflecting a continued emphasis on domestic rebalancing as well as the property sector
slowdown, will spill over in the region through a number of transmission channels, such as trade in goods and services, commodity
prices and investment, Moody’s said.
“Growth rates in Asia-Pacific and Asia-Pacific ex-China are now likely to converge, reflecting the lower growth impetus from China. However, the region will continue to expand faster than most other regions even as growth decelerates in 2024,” it added.