Standard Chartered Bank chief economist for Asean and South Asia Edward Lee said global growth had improved much compared with the last few years due to the weakening of commodity prices, with emerging markets’ growth synchronising with developed markets.

“We have seen a period when the emerging markets did not do so well because of the economic fundamentals.

“Now the emerging markets are back to being positive and, in that sense, it is positive for emerging markets’ assets,” he told reporters on the sidelines of Bank Negara Malaysia (BNM) governor’s address on the Malaysian economy and panel discussion here today.

Present were BNM director for Monetary Policy Department Norhana Endut, Bank Muamalat Malaysia Bhd chairman Mohd Munir Majid and the World Bank senior economist for poverty and equity Kenneth Simler.

“Based on our estimation, the US dollar is generally still overvalued and we feel that in Asia, the ringgit is one of the currencies that is undervalued against the US dollar,” said Lee.

US-China trade war spillover

However, the prospect of a serious China-US trade war could derail the emerging markets’ economic fundamentals, he added.

“A trade war is in nobody’s favour, not even the US. From that perspective, we would like to think it (the situation) is going to be more controlled,” he added.

Lee pointed out that Malaysia, nonetheless, could see some positive spillover from the trade war.

“In terms of some of the key exports from China to the US, you can see Malaysia as being one of the key exporters as well.

“This suggests that Malaysia may have the expertise to supply the same goods to the US as well.

“And, if the tariffs were targeted solely at China, there may be a need for US clients to seek a different source of capacity and production.

“With this, Malaysia could see some spillover,” he added.