Saturday, February 6, 2010

Dec 2009 Trade: A Nice Surprise

If anything is guaranteed to give a forecaster ulcers, it's high volatility. I suppose I shouldn't be surprised, as downturns and upturns generally feature uneven movements in variables.

The December trade data is a case in point. Just as I was questioning my own view that we may be seeing a sustained rebound in trade (due to the lackluster November data), the next month sees a pretty spectacular rebound, at least by some measures:

That's the best performance in terms of annual growth since the middle of 2008, although the month-on-month view is less bullish. In terms of levels, both exports and imports are approximately back at the same levels as in 2007, which is encouraging not just locally but for the outlook for global trade generally. The unadjusted data fell approximately in the middle of the upper range of my December forecast, but seasonally adjusted data very nearly busted the upper bound of the range forecast (i.e. a probability of around only 5%). Them's pretty good numbers.

What's interesting is that this surge is not being driven by exports from the E&E sector, where exports are still around 2004 levels (RM millions):

Just to underscore the decline of E&E as Malaysia's primary export earner, the percentage share of E&E exports to total exports has fallen steadily since about 2001:

This isn't necessarily a bad thing - reliance on one sector enhances external vulnerability, and a more diversified export base would (hopefully) strengthen the economy against external shocks.

Next month's forecasts:

Seasonally adjusted model

Point forecast:RM52,017.89m, Range forecast:RM58,505.89m-RM45,529.89

Seasonal difference model

Point forecast:RM48,148.60m, Range forecast:RM54,927.70m-RM41,369.51m

Technical Notes:
Trade data from Matrade.

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