KUALA LUMPUR, Sept 25 — Developed and emerging economies, including Malaysia, are expected to face a cloudy global outlook moving forward as trade war deepens, the upcoming United States presidential election and fragmented European Union.

In a research note yesterday, MIDF Research said Malaysia, as an export-oriented economy may experience a further slowdown, particularly on its external front.

"Based on our modelling results, trade war which will drag Malaysia’s exports growth to cause large small and medium enterprises (SMEs) (to contract) by -6.4 per cent, followed by medium and small SMEs by -5.6 and -4.9 per cent respectively.

"The smallest SMEs will contract at the very least size of -3.9 per cent. The results are in tandem with the exposure of each SMEs to external trade activities. Almost 70 per cent of large SMEs activities are driven by the exports market whereas micro SMEs is only exposed to outbound shipments at 34.7 per cent,” it said.

Other than SMEs, MIDF Research said the trade war would reduce overall economic growth by -4.8 per cent, compensation of employees by -3.5 per cent and operating surplus by -5.3 per cent.

"In the long run, we opine that impact from the ongoing trade war between the US and China to be muted on ports under our coverage given its position as a transhipment hub and supported by Intra Asean trade and the development of regional distribution hubs near both Port of Tanjung Pelepas and Port Klang.

"This will more than offset the items transported for SMEs which are usually transported via air freight. It is also worthwhile to note that the percentage of contribution from the US and China to Malaysia’s total trade has been increasing slightly thus far this year despite the trade tension,” it said. — Bernama