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 11 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 RM55 billion at the end of December. The decline continued into 2001, and began to stabilise in the RM50 billion-RM52 billion range through September.

Surprisingly, the events of Sept 11 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 RM48 billion, a decline from the end of December 2000 of -13 percent. This decline is not particularly significant, as some fluctuation in trade is to be expected year on year. The gap between November 2000 and Nov 2001 of around RM6.5 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.

Modest claims

An estimate has been made of the total external trade for the year of RM611.3 billion. The official figure is now in, given at RM615.1 billion, for a year-on-year decline of -7.7 percent. The earlier estimate of a -8.3 percent 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 percent 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 percent figure still seems reasonable. Official figures, moulded to mask embarrassment, make much of maintaining a modicum of momentum. Such modest claims are meretricious, more political than palatable.

HARUN RASHID is a scientist avidly interested in the application of Islamic principles in international affairs. The promotion of goodwill through civilisational dialogue motivates his writing. His Worldview

column is a personal analysis of Malaysian affairs from a global perspective.