-  The World Bank warned on Wednesday that further escalation of the crisis in Ukraine would likely trigger a surge in capital flight and push Russia into an economic contraction this year. According to the Bank, Russia's economy would likely contract by 1.8% in 2014 should the crisis escalates further. If tensions begin to ease sooner and there are no new sanctions, the economy would grow by 1.1% this year, down from 1.3% in 2013.

-  In 2013, Russia’s total exports grew by 0.3% YoY to USD526.4bil (2012: USD524.7bil). On the other hand, imports advanced by 1.7% YoY to USD317.8bil (2012: USD312.6bil). As such, trade surplus amounted to USD208.6bil (2012: USD212.2bil).

-  In terms of major trading partners, the EU was the largest export and import market for Russia in 2012. Meanwhile, China had contributed 6.4% and 15.5% to Russia’s total exports and imports respectively. In 2012, the ASEAN region contributed 1.2% and 2.5% to Russia’s full-year exports and imports respectively.

-  We foresee the direct impact on Malaysia’s trade to be limited should there be trade sanctions on Russia. However, global weaknesses and a pull-back in external demand could adversely affect Malaysia’s trade performance. Russia’s exports value is about 2.4x of Malaysia’s exports value in 2013. In terms of exports contribution though, Russia accounted for 0.3% (or RM2.0bil) of Malaysia’s total exports in 2013.

-  Meanwhile, we note that some of Russia’s top 10 trading partners are also Malaysia’s major trading partners (e.g. China, Japan, South Korea and the US). As such, slacks in the trade oriented segments of these economies could potentially hurt Malaysia’s trade performance.

Source: AmeSecurities