KUALA LUMPUR (Aug 4): After tariff turmoil, Malaysia is now grappling with prospects of a weakening US economy that will weigh on demand for its goods, PublicInvest Research cautioned.
US consumer spending is now likely to fall, leading to weaker demand for imported goods, the research house warned. Tariffs on low-value non-critical goods will lead to higher costs for US businesses that will freeze hiring or laying off workers to protect margins, it noted.
“We believe signs of a US recession are creeping up,” PublicInvest said.
The latest July data suggest a weakening US labour market from rising unemployment rate and slower job growth. The world’s largest economy recently became Malaysia’s second-biggest export destination as US importers stocked up in a rush to beat the tariffs.
Just before the deadline on Aug 1, the US unveiled a sweeping set of tariffs on its major trading partners, with imports of Malaysian goods suffering a 19% levy.
A 19% tariff rate could still lead to demand destruction for Malaysia’s rubber glove, furniture, and non-critical electrical and electronic industries, PublicInvest flagged.
Further, “we believe there is still downside risk when more data supporting a weaker US economy are being released in the coming month”, the research house warned.