The first months of the year brought a hint of optimism that we could detect in the behavior of several economic indicators. External trade figures are among those suggesting a recovery is on the way. That is indeed good news, but we should be cautious about what we read in them.
Of course, compared with the data from last year, the current figures for the first third of the year boast significant growth rates. That is the inevitable outcome of the rout in the first half of 2020, and we cannot extract too much meaning from those percentages. But the numbers are also, in several cases, above what they were in 2019 when we lived through more ordinary times – and that deserves notice.
Exports in April were higher than in the same month two years ago, and almost on par with that year when we consider the period January to April. Indeed, the analysis of exports is ‘complicated’ because most of the region’s exports are re-exports; that is, goods for which the local economy is only a transit point. In 2019, re-exports represented about 90 percent of the total Macau exports. In 2020, the economic disturbances and severe drop that we saw in economic activity notwithstanding, a similar share stood.
The interesting thing about the current trends is that domestic exports rose faster than re-exports. As services exports are still very far away from their usual levels, the observed pick-up in goods trade offers a glimmer of hope, no matter how small their weight is in the overall economic activity.
Part of it may result from the earlier pick-up on the mainland economy. Or re-arrangements in the regional patterns of trade brought about by the pandemic. Data also suggests a decreasing diversification of the export destination markets. The combined share of exports to Hong Kong (their leading destination by far) and mainland China rose noticeably and currently stands around 85 percent of the total.
On the other hand, imports are rising quite fast; and are becoming a bit more diversified in their points of origin. Some of the rises may well be tied to the growing optimism about the economic recovery observed earlier. Many businesses had to replenish stocks in anticipation of rising demand, both internal and external. As the rally is proving bumpier than expected, time will tell if the upward trend can be sustained.