Monday, July 7, 2014

May 2014 External Trade: Defying Gravity

When is the trade engine going to lose steam? I honestly don’t know (log annual and monthly changes; seasonally adjusted):


Annual export growth has held above 10% in 5 of the last six months. Some of it is from a low base last year, but that should die off (rather quickly) for the July numbers onwards. There’s no doubt however that there is some underlying strength from external demand (RM millions):


Note that this recent increase in exports has effectively been the first real expansion since 2008, even after taking into account changes in export values.

What makes this all a bit surreal is that Singapore’s non-oil exports are doing pretty badly; China, Korea and Taiwan could best be described as doing “OK”. Even months after this has started, I still can’t get my head around how unusual this is.

Scuttlebutt has it that Malaysia’s tech exports are in the current sweet spot – parts for smartphones and tablets, and with reduced reliance on PC parts or consumer electronics. I don’t know if I buy that story, as this market didn’t exactly spring into existence over the past year. Be that as it may, it’s certainly keeping Malaysia’s exports up in fairy land.

Technical Notes:

May 2014 External Trade report from MATRADE


  1. I just came back from Penang last week and I do believe in that story. From what I saw, there were lots of new electronics investment in 2010-2012. I know the story has been going on for ages (that E&E were down before we were caught in the low-tech/desktop products). But the new investment might have finally refocused the sector to mobile/convergence.

    And then the book order seems to be high. That at least should be less controversial before there's demand from the US now.

  2. I meant to write, "that E&E were down BEFORE BECAUSE we were caught in the low-tech/desktop products"

  3. Could it be that this is just the compensating effect of the FlatLining between Mid2012 to mid 2013 (see chart). i.e. the release of pent up products held back during this flatline period may have caused the upsurge of exports in later parts of 2013 and into 2014. Watch out for the downtrend due to come in late 2014 to early 2015.

  4. Looking at your charts...nett in 2008 was about RM15B.Currently,only about RM7B.What do you think is the reason?And have employment grown as significantly especially in manufacturing?