July 2010 Economic Indicators

I wrote about the economic indicators that are published by the Department of Statistics last year, and haven’t touched the subject since. Part of the reason has been that the indicators are published with a bit of a lag, probably because the IPI is a major component.

Now seems a good time to cover them again, since from last week’s report, the indicators are flashing warning signals:

Every single one of the indicators have turned down. Ordinarily, this wouldn’t be an issue as fluctuations in economic activity is normal. But I’d point out that the Leading index has now declined for a fifth straight month, which is a little worrying.

We’re not on the brink of another recession just yet however:

I’ve tried to reproduce here the smooth growth rates that DOS puts in their reports (the calculation is a little weird, and the explanation obtuse), which isn’t an exact match but close enough for jazz. Malaysia will not be in a recession unless there’s a sustained drop in the growth of the Coincident index below zero, so we’re a ways off yet from that.

But the indicators do confirm that growth is moderating. I haven’t the time to actually re-evaluate the indicators vis-a-vis their usefulness in forecasting GDP, as I did the last time, but maybe next month when the August numbers are in.

Technical Notes:

July 2010 Malaysia Economic Indicators Report from the Department of Statistics