• Singapore’s real GDP growth returned to a surprise positive growth of 0.2% yoy in 1Q21 (-2.4% in 4Q20), after three consecutive quarter of contractions
• Monetary Authority of Singapore (MAS) in the April monetary policy meeting kept its monetary policy unchanged
• Indonesia’s export growth surged by 30.5% yoy in March from 8.6% in February

Singapore’s MTI anticipates GDP growth to a range 4.0% and 6.0% in 2021

Singapore’s real GDP growth in 1Q21 rebounded to 0.2% yoy in 1Q21 (-2.4% in 4Q20), after three consecutive quarter of contractions, which was based on the government’s advance estimate. Positive economic growth was supported by the increase in manufacturing sector, which was propelled by higher output expansions in chemical and biomedical manufacturing and electronics and precision engineering clusters. As for the services sector, the magnitude of decline was smaller at -1.2% yoy compared with -4.7% in 4Q20. For 2021 as a whole, Singapore’s MTI anticipates a rebound in GDP growth to a range of between 4.0% and 6.0%, recovering from last year’s recession, in anticipation of improvement in growth of key external economies as well as expectations of easing travel restrictions. In terms of sectors, manufacturing sector will continue to expand led by higher demand for semiconductors as well as better demand from China and intra-regional trade. Consumer-related sectors are expected to benefit from an improvement in consumer sentiments amidst steady turnaround in labour market as well as distribution of vaccines. However, MTI cautioned that trade-related services sectors, aviation- and tourism-related sectors to be impacted by sluggish in international travel demand.

Monetary Authority of Singapore (MAS), in the April monetary policy meeting, kept its monetary policy unchanged at a zero percent per annum rate of appreciation of policy band. There will be no change to the width of the policy band and the level at which it is centred. MAS noted that its policy stance is consistent with medium-term price stability given the current economic outlook. MAS also guided that core inflation to stay low this year. We believe that the decision by MAS reflected the better-thanexpected release of advance estimates of 1Q21 GDP growth, which showed positive growth. In February, the non-oil domestic exports (NODX) grew slower by 4.2% yoy from 12.7% in January. We believe that if Singapore’s economy continues to improve further, this could lead MAS maintaining monetary policy in its next meeting in October 2021.

Separately, Indonesia’s export growth surged by 30.5% yoy in March from 8.5% in February, its fifth consecutive month of positive growth. The increase was the highest level since July 2017. Growth in exports was supported by shipments of palm oil, steel, coal and oil and gas. Imports rose by 25.73% yoy during the month compared to 14.9% in February boosted by imports of iron and steel. As a result, the trade balance remained in surplus of US$1.56bn (US$2bn in February), its eleventh straight month of trade surplus. On a cumulative basis, Indonesia recorded a higher trade surplus at US$5.5bn in Jan-Mar (US$2.6bn in Jan-Mar 2020), given stronger export demand, partly due to recovery in external environment in tandem with weaker import demand.

Source: Affin Hwang Research - 16 Apr 2021