March 2014 External Trade

Yesterday’s trade report was a mix of good and bad (log annual and monthly changes; seasonally adjusted):

Export growth was pretty good, at 8.4% in log terms on an annual basis. On a monthly comparison however, exports dropped 4.7%. Import growth was near zero on a yearly basis, and contracted on a monthly basis.

The other story I think is, for all the strength of E&E exports over the last few months, commodity and other exports have held up as well (log annual and monthly changes; seasonally adjusted):

One factor to note is that the monthly data for all the above suggests that the annual growth numbers flatter to deceive – much of it is coming from a base effect. I’m not going to get tired of saying that 1Q2013 was an absolutely awful quarter. Having said that, there’s no reason to doubt that export values have come up substantially (RM millions):

The other factor to note is that much of the growth in value is being driven by a weaker Ringgit (log annual and monthly changes; 2005=100):

In terms of unit volumes, exports are up just 2%, although on the positive side, export volumes are being driven by manufacturing, with an assist from oil & gas and from chemicals.

Looking forward, there are few clues to rely on in the data – the flattish import growth isn’t terribly heartening (RM millions):

Range-bound intermediate goods imports doesn’t support the case for further growth in the volume of exports, though we should see a rebound in capital goods imports getting into the second half of the year. The external demand situation looks much better than it did a couple of years ago, but shaky performance in China and Europe are still grounds for concern.

So enjoy the growth while it lasts, it might not be for long.

Technical Notes:

1. March 2014 External Trade report from MATRADE
2. March 2014 External Trade Indices from the Department of Statistics (warning: pdf link)