In a globalised economy, countries and trade are becoming more connected than before. The current US-China trade war has created unease within the business community, including those within Malaysia. Many are hopeful that the upcoming trade talks between the two economic giants will ease trade tensions.
These days, nations are no longer insulated from escalating global tension, especially involving superpowers. Any fallout from the trade wars will have a global spiral effect. A gloomy economic outlook may affect the stock market in major countries, leading to a domino effect in the region. When the stock market is down, consumer confidence will dip and the economic growth dampened.
Although there are some who feel that the trade war can benefit Malaysia, we should not overlook long-term economic interests. It is true that some US manufacturers are looking elsewhere to source for substitute Chinese goods, but the increase in demand has been marginal. We have also not recorded significant increase in foreign direct investments (FDI) since the trade war started.
At the end of the day, we need to step up structural economic reforms to ensure we become a magnet for FDI. This includes diversifying our sources of revenue such as beefing up our service or tourism industries. This will make us more resilient to external economic shocks.