Monday, February 10, 2014

December 2013 External Trade

Things are seriously picking up (log annual and monthly changes; seasonally adjusted):


In log terms, seasonally adjusted exports are up 13.9%, while imports rose 13.5%. The monthly growth figures aren’t quite so positive, but the fact that December would be the sixth straight month of expansion says something.

Just to underscore how unusual the trade numbers over the last six months have been (RM millions):


I’d consider this to be the first secular increase in exports in three years – if you’re into trends, it would go even further back, to 2007.

Another thing that’s a little different this month is that the E&E boom is slowing (log annual and monthly changes; seasonally adjusted):


On the month, E&E exports fell 8.0% in log terms, although the annual growth rate is still in double-digits. Exports still rose because non-E&E exports, particular of refined petroleum products, more than counterbalanced the shortfall.

On the import side, consumption imports stayed on track, intermediate goods imports dropped, while capital goods imports spiked (RM millions):


I haven’t bothered checking up on where the capital goods demand has come from, but given the “lumpy” nature of capital goods, I doubt it will be sustained.

Overall, we’re seeing a very rose picture for the last quarter of 2013, which I expect should be confirmed by the IPI numbers due later today.

Technical Notes:

December 2013 External Trade report from MATRADE


  1. Do you think the increased trade numbers are due to our weak ringgit? If so, do you think it's sustainable for 2014?

    1. @roger

      I don't think so. On an aggregate basis the Ringgit was only down about 2% for the year, and much of the improvement in exports is coming from the E&E sector, which isn't really exchange rate sensitive (I've just checked).

    2. Sorry I don't understand why E&E exports would not be exchange rate sensitive

    3. @roger

      The E&E sector in Malaysia is only part of larger supply chain that covers the whole of East Asia. Exports (in USD) from this sector are composed of mainly of imported inputs (also in USD). The effect of the exchange rate on competitiveness will therefore be only to the extent of local value added (which is on the low side), which is not the case with fully domestic products made for export.

    4. Thanks for the clarification. The low value-add of E&E gives me food for thought. It's as if the MNCs view us as a source of cheap labour, cheap land and tax holidays.