Mixed Performance in Regional Exports

Singapore Retail Sales Showed the Lowest Growth in Four Years

Philippines’ export growth slowed for the third consecutive month to 0.5% yoy in January compared to 2.3% yoy in December. This was also its weakest export growth since its 4.5% yoy decline in November 2016. However, import growth slowed to 11.4% yoy in January from 20% in December, albeit its fourth straight month of double-digit growth. As a result, the trade deficit narrowed by US$521.8mn to US$3.32bn in January from US$3.84bn in December. Export growth was weighed down by continued decline in total agro products and manufactures. However, with exports of electronic products, remaining healthy in January, supported by global demand for semiconductors sales, many market observers believed the slower growth in January, may be temporary. The Philippine government anticipates export growth to ease by 7% in 2018, from 10.2% in 2017, while import growth is expected to be firm at 10% yoy compared to 10.4% yoy in 2017. Hence, this will lead to a second year of current account deficit projected by the government at US$1.6bn in 2018 from US$0.95bn in 2017.

As for Indonesia, its trade balance deficit in February narrowed to US$116m from US$756m in January. This was supported by an improvement in export growth of 11.8% yoy and a slower rise in imports of 25.2% yoy during the month. Higher export growth was driven by both non-oil and gas as well as oil and gas exports. The slowdown in import growth was due to decline in imports of oil products and gas. Bank Indonesia has recently stated that Indonesia’s trade deficit reflects increasing activities in production and investment and it also anticipates trade balance to improve in line with sustained global economic recovery and higher global commodity prices. The Indonesian government is targeting the country’s real GDP growth for 2018 to be around 5.4% yoy from 5.1% in 2017. Malaysia’s exports also returned to a double-digit growth of 17.9% yoy in January, after slowing down sharply to 4.7% in December, driven by exports of E&E products.

Separately, Singapore’s retail sales declined sharply from 6.3% yoy in December to -8.4% in January, below market expectations of 2.2% and the lowest growth since February 2014. The weak growth was reflected almost across the board, attributed mainly from seasonal factor, where Chinese New Year festival was celebrated in the month of January last year. Exclude motor vehicles, retail sales also showed a contraction of 8.1%. The sharp slowdown in retail sales during the month was led by wearing apparel & footwear category, which fell from +3.4% yoy in December to -17.7% yoy in January. We expect the weak January retail sales to be temporary and will likely improve in the coming months. This was also in line with the latest survey by Monetary Authority Singapore (MAS), that showed the country’s 2018 economic growth forecast upgraded to 3.2%, as compared to 3% previously, in view of sustained growth momentum and brighter outlook for wholesale & retail trade and accommodation & food services.

Source: Affin Hwang Research - 16 Mar 2018