Thursday, December 4, 2008

Exports down 2.6% in October

Malaysiakini carried an interesting economic report entitled, Exports down 2.6% in October. Here's my take on the Malaysiakini report.

Given what the government's pronouncements that an challenges in Malaysia's traditional export markets may be cushioned by seeking new Asian export markets, October 2008 export figures that showed a 2.6% decline compared to the same month last year has been called unexpected.
What makes this decline unexpected are certain economists' expectations for a 6.3% rise in a country where trade is more than 100% of gross domestic product, or the value of all goods and services produced.

The declining export numbers is blamed on the weakening electronic and electrical (E&E) sector.

The last big fall in export numbers was in March 2007 when they fell 4.5%.

Imports for October fell by 5.3% year-on-year compared with analyst expectations for a 1.8% rise. This information comes in the wake of South Korea announcing an exports slide by 18.3% in November, the biggest drop in seven years, and amid tumbling oil and commodity prices which are key exports for Malaysia.

Impact on Malaysia's trade surplus
Exports totalled RM53.46 billion, down from RM62.31 billion in September, while imports fell to RM43.84 billion. This has eaten into Malaysia's trade surplus, which fell to RM9.62 billion in October compared with RM14.5 billion in September.

Pinning misplaced hopes on ASEAN
The Malaysian economic managers have pinned their hopes of avoiding a recession on boosting exports to Asia. But the sickening reality is that the October data showed exports to the 10 countries that make up Asean fell by 6.1% from a year ago and exports to China fell to RM4.89 billion from RM5.26 billion on weaker commodity and oil prices.

Growth or decline?
Malaysia's economic managers has expressed the hope of recording economic growth of 3.5% in 2009.

I am inclined to believe that Malaysia will be lucky to post zero growth. Flat is the new up. Zero is better than negative. Such are the times that we live in.

Impact on monetary policy
Like many, I am hoping that the poor trade data will cause the oracular Bank Negara governor to further cut the overnight bank lending rates (OPR) from the current 3.25% to 2.75%. That is a 50 basis points reduction.

But, knowing Bank Negara, they will go inch-by-inch. So it will be 25 basis points, then, wait-and-see, oh shit!, reduce another 25 basis points, then, wait-and-see, oh shit! oh shit! (the last two was added as a mischevious afterthought since this blogger is not employed in the banking sector and, can claim immunity).


Anonymous said...

I don't share yr optimism of posting zero growth in 2009.

Rather there is a consistent pessimism to jack up the rate to positive territory, come what may.

My choice of word for these 'feeling' is intentional.

Remember in 1997 when Zeti was tasked to announced the growth rate? We miraculously posted a marginal +ve growth despite the general predictions of the opposite!

The figures that shown were not tallied somewhat & obviously some number acrobatic was done. Zeti's tone then also gave the show away.

So how much can one trust those numbers that come out now?

Consider the current ostrich-like feel-goods mode that the current leadership want, coupled with the umno election, one can bet there will be another show of number acrobatic.

Whether Zeti's voice will give this show away is another topic? Maybe she is more 'old-hand' now compare with when she was new to the post of GBN.


gram.kong said...

de minimis,
I have just re-posted an article I wrote in January 2008 which is very relevant to what you wrote here.

I hope you can read it.

de minimis said...


You may be right.


I'll read it straight away, bro.

Anonymous said...

Somehow the economic data that we receive is always 1 month lag. It looks like our Statistic Department is sleeping on the job.

That explains why there is a disconnect of prognosis between MOF and the present real economy.

So the Stats Dept better buck up and release current the economic data like the rest of the world.

Planners/economic analysts need current data so that they can assess whether their measures are gaining traction. [not that the measures taken are anything to shout's more like no action] Duh!

satD said...

Some tots on the Monetary aspects..

How long do u think our economy can sustain a negative interest rate environment??What would the impact be for "investments"...will this put more onus on Gov and kill PFI completely....

careful with Negara they are always playing with other "tools" to implement their monetary policy...take post Sept 98 they systematically lowered the Statutory Reserve Requirement for the Banking System from 12.5% to 4% of Eligible Liabilities.... billions were released into the system...previously these reserves we not paid any interest..then they had to borrow back this money which the released at the Overnite rate on a daily basis for me that was a very costly monetary expansion activity..