Reflecting the impact of ringgit depreciation against the US dollar on export value as well as the nature of Malaysia's total trade expanded settled in US dollar, Malaysia's total trade expanded by 27.5% to RM299.2 billion during the first seven months of 1998 (January-July 1997: 3.7%). Gross exports, valued at free-on-board (f.o.b.), surged by 40.9% to RM162.7 billion (January-July 1997: 19.7%), accounting for 54.4% of total trade. Gross imports, value at c.i.f., however, increased moderately by 14.6% to RM136.4 billion (January-July 1997: 4.7%), to constitute 45.7% of total trade, due to lower volume of imports as a result of contraction in domestic demand. With the export value increasing at a faster rate than that of import, Malaysia registered a higher trade surplus of RM26.2 billion during the first seven months of 1998, against a deficit of RM3.6 billion in the corresponding period of 1997. The United States of America (US) is the Malaysia's single largest trading partner during the first seven months of 1998, with a total trade value of RM63 billion or 21.1% of Malaysia's total trade, followed by Singapore (15.4%), Japan (15.2%) and the European Union (EU) (9.2%). Trade with the Newly Industrializing Economies (NIE's) of Asia, comprising South Korea, Taiwan and Hong Kong SAR, constituted 11.9% of Malaysia total trade during the first seven months of 1998.

Malaysia's trade with the US expanded markedly by 58.7% to RM63 billion in the first seven months of 1998. Exports to USA surged by 73% to RM34.6 billion while imports increased by 44.2 % to RM28.4 billion. Consequently, Malaysia's registered a higher trade surplus of RM6.2 billion during the first seven months of 1998 with the US, compared with a surplus of RM0.3 billion in the corresponding period of 1997. Malaysia's exports to Us constituted 21.3% of total export earnings during the first seven months of 1998 and comprised mainly of machinery and telecommunications, particularly electronics and electrical machinery and parts, office machines and automatic data processing equipment, which accounted for 77.2% of total exports to US. Imports from the US, accounted for 20.8% of total Malaysia's imports during the first seven months of 1998. Main items imported from the US were machinery including electronics, electrical machinery and parts as well as thermionic valves and tubes and transport equipment, which accounted for 76.4% of total imports from the US.

Malaysia's external trade with Singapore expanded further by 16.4% to RM46.2 billion during the first seven months of 1998 (January-July 1997: 6.1%). With this, Singapore was as Malaysia's second largest trading partner; accounting for 15.4% of Malaysia total trade during the period. Malaysia exports to Singapore are by 19.9% to RM28.3 billion compared with a growth of 4.7% in the corresponding period of 1997. The bulk of the total exports to Singapore comprised mainly machinery and transport equipment including electrical and electronics products, office machines and automatic data processing and telecommunications equipment, as well as other intermediate 

manufactured goods. On the other hand, import from Singapore increased by 11.2% to RM17.9 billion (January-July 1997: 8.3%). Major items imported from Singapore were machinery, telecommunications and transport equipment, mainly electronics, electrical machinery and parts (62.6%) and inedible crude material, mineral fuels and lubricants (16.2%). Consequently, Malaysia registered a higher trade surplus of RM10.4 billion in the first seven months of 1998 with Singapore, compared with a surplus of RM7.5 billion in the corresponding period of 1997.

Malaysia's total external trade with Japan grew moderately by 8.1% during the period under review (January-July 1997: 3.9%) to RM45.4 billion or, 15.2% of Malaysia's total trade. This reflects 18.7% increase in Malaysia's exports to Japan to RM18.4 billion during the first seven months of 1998 (January-July 1997: 2.3%) while imports rose marginally by 1.9% to Rm27 billion. Consequently, Malaysia's trade deficit with Japan narrowed by RM2.4 billion to RM8.6 billion during the first seven months of 1998, from a deficit of RM11 billion during the same period of 1997. As shown in chart 7.7, exports to Japan constituted 11.3% of Malaysia's total export earnings, comprised mainly of natural and manufactured gas, telecommunications and electrical machinery, apparatus and appliances. Together, these export items accounted 86.4% of total exports to Japan during the first seven months of 1998. Imports from Japan accounted 19.8% of Malaysia's total value of imports during the period under review. A total of 90.7% of Malaysia's imports from Japan consisted electrical machinery, apparatus and appliances, telecommunications and transport equipment as well as other manufactured goods particularly iron and steel.

Malaysia's trade with ASEAN (excluding Singapore) increased at a faster rate of 36.4% to RM23.6 billion, accounting for 7.9% of Malaysia's total trade. The value of exports to these countries increased by 30% to RM11.7 billion (January-July 1997: -1.1%). The major items exported were mainly machinery, telecommunications and transport equipments as well as other manufactured goods. Imports from ASEAN countries rose by 52.4% to RM12.5 billion (January-July 1997: 22.4%). The bulk if items imported were machinery, telecommunications and transport equipment, other manufactured goods as well as mineral fuels and lubricants. With imports rising at a faster rate than exports, Malaysia's trade with the ASEAN countries registered a deficit of RM1.4 billion during the first seven months of 1998, compared with a surplus of RM0.9 billion during the same period in 1997. Among the ASEAN countries, Malaysia experienced a trade deficit with Indonesia, the Philippines and Thailand amounting to RM1.2 billion, RM1 billion and RM0.02 billion respectively during the first seven months of 1998.

TRADE WITH JAPAN
(January - July)

Total trade with EU, which accounted for 13.9% of Malaysia's total trade, grew by 15.5% to RM41.6 billion during the first seven months of 1998 (January-July 1997: 5.1%). Total exports to EU surged by 53.7%% to RM25.2 billion while imports declined by 3% to RM16.4 billion while imports declined by 3% to RM16.4 billion. Malaysia, therefore, registered a trade surplus of RM8.8 billion compares with a trade deficit of RM0.5 billion in the corresponding period of 1997. Major export items to EU comprised electrical machinery, telecommunications and office machines and automatic data processing equipment as well as final manufactured goods. Meanwhile, imports from EU were mainly electrical machinery, apparatus and appliances, as well as industrial machinery and equipment. Germany remained as Malaysia's most important trading partner among the EU countries, accounting for 25.2% of Malaysia's total trade with EU, followed by United Kingdom (20.7%). Malaysia's exports to Germany expanded by 41.2% to RM4.8 billion while imports from Germany increased by 16.3% to RM5.7 billion, resulting in Malaysia recording a trade deficit of RM0.9 billion. At the same time, exports to UK surged by 47.4% to RM5.6 billion, while imports from UK declined by 3.2% to RM3 billion. With export value being higher than import, Malaysia recorded a trade surplus of RM2.6 billion during the first seven months of 1998 (January-July 1997: RM0.7 billion).

Malaysia's trade with the NIE's of Asia (excluding Singapore), constituting 11.9% of total trade, grew by 13% to RM35.7 billion during the first seven months of 1998, reflecting the impact of ringigt depreciation on trade value which was largely denominated in US dollar and lower volume of external trade due to economic slowdown in these countries. Exports grew by 19.6%, while imports grew by 6.8%, resulting in Malaysia recording a trade surplus of RM1.9 billion (January-July 1997: RM 1.1 billion). Exports to NIE's comprising mainly machinery, telecommunications and transport equipment and mineral fuels while major imports form NIE's were machinery, telecommunications and transport equipment as well as other manufactured goods. Among the NIE's Taiwan remained as a major trading partner amounting 38.4% of total trade with the NIE's followed by Hong Kong SAR (2\32.5%) and South Korea (29.4%). Trade with Taiwan expanded by 24.5% to RM13.7 billion, with exports increasing by 25.9% to RM6.8 billion, while imports increased by 23.2% to RM6.9 billion. Consequently, Malaysia's trade with Taiwan resulted in a deficit of RM0.1 billion (January-July 1997: -RM0.2 billion). Trade with Hong Kong SAR rose by 24.7% to RM11.6 billion during the first seven months of 1998 (January-July 1997:2.2%). With exports expanding by 26.2% to RM8.2 billion and imports increasing by 21.4% to RM3.4 billion, Malaysia registered a trade surplus of RM4.8 billion with Hong Kong SAR. Meanwhile, trade with South Korea grew by 6.1% to RM10.5 billion during the first seven months of 1998 (January-July 1997: -2.5%). Exports to South Korea increased by 5.4% to RM3.9 billion while imports from South Korea increased by 6.5% to RM6.6 billion. Therefore, Malaysia's continued to record a trade deficit of RM2.7 billion with South Korea in the first seven month of 1998 (January -July 1996: -RM2.5billion).

Total trade with People's Republic of China rose by 39% during the first seven months of 1998 (January-July 1997: 16.1%). The increase was underpinned by 53.8% increase in exports to RM4 billion, particularly through of higher exports of cork and wood manufactures (excluding furniture), electrical machinery, apparatus and appliances as well as petroleum products. Malaysia's imports from China, however, which increased at a slower rate of 27.3% to RM4.2 billion (January-July 1997: 32%), comprised mainly food items, transport equipment and electrical machinery, apparatus and appliances: With import value being higher than export value, Malaysia's recorded a trade deficit of RM0.2 billion with China during the first seven months of 1998 (January-July 1997: -RM0.7 billion).

Malaysia's external trade with Australia and New Zealand expanded by 28.6% and 12.6.% respectively during the first seven months of 1998. In the case of Australia, Malaysia's exports surged by 78.9% to RM3.4 billion, while imports fell by 3.3% to RM2.9 billion. With exports exceeding imports, Malaysia recorded a trade surplus of RM0.5 billion with Australia. This is reversal of the situation during the corresponding period of 1997 when Malaysia recorded a trade deficit ofRM1.1 billion. As for New Zealand, Malaysia's exports surged by 33.3% to RM0.4 billion, while imports increased marginally by 1.8% to RM0.58 billion. Nevertheless, Malaysia still recorded a trade deficit of Rm0.18 billion with New Zealand (January-July 1997: -RM0.3 billion). Malaysia's exports to both Australia and New Zealand comprised mainly palm oil, rubber, tin, crude petroleum and sawn timber while Malaysia's imports consisted largely of dairy products, wheat and meat.

DIRECTION OF TRADE WITH OTHER TRADING PARTNERS
(January - July)

Although Malaysia's trade with West Asia rose by 48.4% to RM4.6 billion, it accounted for only 2% of Malaysia's total trade during the first seven months of 1998. Total exports to West Asia increased by 54.5% to RM3.4 billion, while imports grew by 33.3% to RM1.2 billion. With export value expanding at a much faster rate than the value of imports, Malaysia's registered a trade surplus of RM2.2 billion during the first seven months of 1998 with West Asia, compared with a surplus of RM1.3 billion during the corresponding period of 1997. United Arab Emirates, Saudi Arabia and Jordan accounted for 66.7% of Malaysia's total trade with West Asia. Major items exported to West Asia were palm oil, food and electrical products. On the other hand, imports from West Asia comprised mainly mineral fuels and lubricants as well as inedible crude materials.