KUALA LUMPUR – Despite concerns over potential ringgit depreciation and economic instability should Republican candidate Donald Trump return to the White House, economists believe Malaysia could see some benefits from his presidency.
While Trump’s campaign has been marked by protectionist rhetoric, reflecting his previous “America First” agenda, Carmelo Ferlito, chief executive officer of the Centre for Market Education (CME), suggested Malaysia might gain amid a possible global trade war.
According to Ferlito, Putrajaya could respond by either positioning itself as an alternative supplier and hub for manufacturing investments, replacing China, or by facilitating Chinese products through transformation processes in Malaysia.
This would then allow China-made products to reach the United States as Malaysian products, Ferlito said.
“I expect maybe some tension on both trade and currency in the short term, but I also expect the Malaysian system to be resilient enough to adjust to the changes and to find its way through it, like it previously did,” he added.
Asserting that both Trump and his rival US Vice President Kamala Harris presented a “fundamentally flawed” vision of economic systems, Ferlito pointed out that the latter’s advocacy of price control measures could have potentially put entire industries at risk.
Though Trump’s protectionist stance may be challenging, Ferlito highlighted that the former president has promised lower taxes and aims to reduce global conflicts, particularly the war in Gaza.
Meanwhile, Global Asia Consulting senior consultant Samirul Ariff Othman suggested that a Trump administration could inadvertently boost regional trade alliances by reintroducing heightened tariffs, potentially isolating the US from multilateral trade efforts.
Echoing Ferlito’s assessments, Samirul said this could create an opportunity for Malaysia to position itself as a critical trade hub within Asean while further strengthening its role in global supply chains.
Samirul, who is also an adjunct lecturer at Universiti Teknologi Petronas, added that it would be prudent for Malaysia to monitor and adapt to shifts in US fiscal policies, considering inflationary pressures that may arise from Trump’s trade policies.
“A more protectionist US stance could encourage regional powers to intensify cooperation, particularly in technology, energy, and defence.
“Malaysia could take a leading role within Asean to maintain economic stability and regional security, effectively navigating the competitive pressures between the US and China,” he said.
He also said that while a Harris presidency would have likely weakened the US dollar and supported the ringgit amid interest rate cuts, Trump’s win could see the strengthening of the dollar and potentially fuel inflation.
He said this could see the ringgit depreciating to around 4.48 by year-end, with a moderate recovery to 4.37 by the end of next year.
Stable global economic environment
Conversely, Geoffrey Williams, founder and Director of Williams Business Consultancy Sdn Bhd, said the ringgit could be set to benefit from a more stable global economic environment under Trump’s leadership as he is expected to take a “different approach” to current conflicts.
Williams also commended Bank Negara Malaysia’s (BNM) recent decision to hold the Overnight Policy Rate (OPR) at 3%, calling it a “right decision.” He asserted there’s no immediate need for Malaysia to alter its monetary policy, given the strong state of its economy.
“At the low end of the forecasts, headline inflation will be around 2% for the year. Economic growth will be around 5% at the high end of the forecast and the financial system is sound.
“The ringgit has strengthened, but is subject to volatility due to international events which are outside of Malaysian policymakers’ control. Nonetheless, BNM can make policy intervention other than changing interest rates to manage (potential issues),” he added.
At the time of writing, Trump secured 277 votes in the Electoral College, far outpacing Harris who obtained 224. At least 270 Electoral College votes are needed to clinch the presidency.
Trump was first elected president in 2016, defeating former Secretary of State Hillary Clinton. However, in 2020, he was defeated by Joe Biden, who had served as vice president under President Barack Obama. – November 7, 2024