External trade for a country may be expressed quantitatively as the sum of exports and imports. This figure, reported month by month, gives an indication of the amount of foreign trade that is occurring. Separated into its components, the relative balance between imports and exports can be evaluated. When imports exceed exports, that is deemed to be a negative factor, as the excess of imports must be paid with cash or taken on credit. The total amount of external trade, imports plus exports, is a general indicator of economic activity, whether vigor, torpor or malaise.

The chart shows the total external trade for Malaysia for the past eleven months, with the same months of 2000 presented for comparison.

The sales value of total imports plus exports rose steadily in 2000, peaking at the end of September and falling to around RM 55 billion at the end of December. The decline continued into 2001, and began to stabilise in the RM 50-52 billion range through September. Surprisingly, the events of 911 gave a slight boost for October and November, but this did not carry through to the end of the year.

External trade at the end of December 2001 came in under RM 48 billion, for a decline from the end of December 2000 of -13%. This decline is not particularly significant , as some fluctuation in trade is to be expected year on year. The spread between November 2000 and November 2001 of approximately RM 6.5 billion is maintained in the December 2000 and December 2001 spread.

What is cautionary is the trend, which is presently sharply downward. If this trend carries into the new year, which is likely, it presents a troublesome picture for the Malaysian economy. Major trading partners, Japan, the US and Singapore, have been the core of growth for the past decade. They do not offer signs of imminent recovery. While new partners show increased activity, the level of their combined economies offers no significant promise of replacing the old.

In a November 5th article (A Negative GDP For 2001?) an estimate was made of the total external trade for the year of RM 611.3 billion. The official figure is now in, given at RM 615.1 billion, for a year-on-year decline of -7.7%. The earlier estimate of an -8.3% decline, made over three months ahead of the release of the official figure, was close.

At that time, a fall in the GDP of -3.5% seemed reasonable, in spite of official pronouncements at the time that it would be slightly positive. In view of the latest official figures, the -3.5% figure still seems reasonable. Official figures, molded to mask embarrassment, make much of maintaining a modicum of momentum. Such modest claims are meretricious, more political than palatable.

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