IP grew for the second consecutive month by 1.5% y/y in February from 1.2% y/y in January. Improving IP was supported by better performance from across the three IP sub-sectors. At the same time, distributive sales fell slower contraction by 0.9% y/y in February (Jan: -2.6%).

With the gradual improvement in the overall economic performance and supported by low base, the economy should expand around 6%. And the interest rate (OPR) Policy is more likely to stay unchanged at 1.75% for 2021.

• Industrial Production (IP) grew for the second consecutive month by 1.5% y/y in February from 1.2% y/y in January. Improving IP was supported by better performance from across the three IP sub-sectors. While manufacturing grew by 4.5% (3.5% in January), mining fell by 6.0% (-4.5% in January) alongside electricity which was down by -5.8% (-4.6% in January).

• But on a monthly basis, the IP fell 6.4% m/m in February from 0.1% m/m in January partly due to shorter working days, Lunar New Year holiday and the impact from less stringent MCO 2.0.

• Export-oriented industries rose 5.8% y/y in February from 4.5% y/y in January. It came from continued healthy performance from E&E (Feb: 10.3%; Jan: 7.9% y/y), rubber products (Feb: 66.1% y/y; Jan: 75.1% y/y), and chemicals & chemical products (Feb: 3.6% y/y; Jan: 0.2% y/y).

• Gradual pickup in in overall sentiments led to a slower contraction from distributive sales by 0.9% y/y in February (- 2.6% in January). Much of the support came from motor vehicles sale (-0.1% y/y in February vs -12.4% y/y in January) and wholesale trade (-0.1% y/y in February vs -0.4% y/y in January). Retail sales remained a drag, down by -3.0% y/y (Jan: -2.6% y/y).

• With the gradual improvement in the overall economic performance and supported by low base, the economy should expand around 6%. And the interest rate (OPR) Policy is more likely to stay unchanged at 1.75% for 2021.

Source: AmInvest Research - 12 Apr 2021