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Impact of Slowdown to Asia

In: Historical Events

Submitted By joeeeyeow
Words 1218
Pages 5
1. The impact of slowdown to Asia – economic variables, import and export of Asia The degree of impact of China’s slowdown on Malaysian companies vary depending on the price competitiveness, availability of substitution, type of business and the management’s ability to minimise the impact (Malaysia Chronicle, 2015). 1. Export
The slowdown in China’s economy will ultimately impact Malaysia’s exports demand. China is Malaysia’s second largest export market, accounting for 15 percent of its export economy (Springfield, n.d.), Malaysia-China two-way trade topped $100 billion in 2014 (Kurlantzick, 2015). Both goods and services industries are affected in line with slowdown in China’s domestic demand, namely key export products such as electronic component, transport equipment and palm oil, manufacturing sector; and services industries including trading, shipping and tourism which are externally oriented (Singapore Business Review, 2013). Slowdown in China’s economic growth also weakened its currency, thus consumers will consumed more locally-produced goods as imported goods becomes more expensive (Kok, 2015). 2. Import
1% drop in China’s growth rate is due to 4% appreciation in RMB as an act of shifting demand from export to consumption and 1% increase in wage. As labour cost and RMB becomes more expensive, China exports price rises, thus Malaysia import price increases, contributing to capital outflow and increased CPI (Bokyeong, n.d.). 3. Growth
The fall in exports also caused slowdown in growth when loans are harder to get, and cost of borrowing money increases. Malaysia’s fiscal deficits has reached RM14.9 billion, while bearing debt of 53 percent of GDP being Asia’s highest household debt country (Ar, 2013).
On the other hand, as labour costs in China rise, Asean-China Free Trade Agreement becomes a potentially attractive option for Chinese and…...

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