However Thailand’s Trade Surplus Widened to US$1.6bn in June

Thailand’s trade surplus widened for the second straight month to US$1.6bn in June from US$1.2bn in May, its largest surplus since November 2017. The country’s gross exports rose by 8.2% yoy in June, albeit slower than 11.4% in May, its slowest growth since March 2018. Similarly, gross imports also slowed to a three-month low of 10.8% yoy in June from 11.7% in May. The slowdown in export growth was mainly due to lower demand for principle manufacturing products, which accounts for 80.2% of total exports, that had slowed from 12.6% yoy in May to 8.2% in June. In comparison, gross imports was weighed down by lower imports of raw materials and intermediate products, which slowed to 0.9% yoy (9.2% in May) and a decline in vehicles and transport accessories to -0.3% yoy (8.0% in May). Despite the risks arising from the trade war between US and China, Thailand’s Commerce Ministry of Thailand remained cautiously optimistic on trade outlook and raised its export growth forecast to 9% for 2018 from 8% projected earlier. This is expected to be “boosted by the global economic recovery and the government’s close cooperation with exporters to tackle obstacles and drive shipments”.

Separately, Singapore’s industrial production slowed to a three-month low of 7.4% yoy in June from 12.9% in the previous month, but better than market expectations of 3.3%. By clusters, slower production was recorded in the electronics (7.1%), biomedical manufacturing (13.8%), chemicals (1.6%) and general manufacturing industries (0.5%). Meanwhile stronger growth was seen in the precision and transport engineering clusters which expanded by 2.7% yoy and 12.4% yoy, respectively. According to Ministry of Trade and Industry (MTI) recently, Singapore’s flash 2Q18 real GDP growth expanded by 3.8% yoy in 2Q18, lower than 4.3% in 1Q18, where we believe the full year 2018 forecast will be in the range of between 3.5%- 4.0%.

Meanwhile, Singapore’s inflation accelerated for the second consecutive month to its fastest pace since November 2017 at 0.6% yoy in June (0.4% in May). Core-inflation, which excludes accommodation and private road transport costs, also rose for the second straight month to 1.7% yoy from 1.5% in May, its highest rate in four months. In 2Q18, headline inflation had averaged 0.3% yoy (0.2% in 1Q18) while core-inflation was steady at 1.5% yoy for the second straight quarter. As for domestic inflation, MAS and MTI also expects it to increase amid the pickup in wage growth and domestic demand. In 2018, MAS and MTI projects headline inflation to settle within the upper half of the 0-1% while core-inflation is forecasted to be in the upper half of the 1-2% range, as imported inflation is anticipated to rise gradually due to higher global oil and food commodity prices.

Source: Affin Hwang Research - 27 Jul 2018