• Thailand’s March exports growth rebounded to 8.5% yoy from a decline 2.6% in February supported by higher shipments of cars and car parts, plastic pellets and rubber products
• Thailand’s manufacturing production index rebounded by 4.1% yoy (-1.1% in February), first positive growth after 23 months since October 2018
• Singapore’s inflation rate rose for the fourth consecutive month by 1.3% yoy in March from 0.7% in January, partly due to low base effect

Asean’s Exports Likely to Remain in Positive Territory in 2Q21

In Thailand, similar to other Asean’s exports (such as Malaysia and Singapore), the country’s March exports growth rebounded to 8.5% yoy from a decline 2.6% in February. Apart from healthy demand for electronics related goods, growth was supported by higher shipments of cars and car parts, plastic pellets and rubber products. Imports also recorded positive growth but at slower pace of 14.1% in March from 22% in February. The country’s trade balance continued to widen to a surplus of US$0.7bn in March from a trade surplus of US$0.01bn in February. Thailand’s Commerce ministry guided that it may revise its export growth forecast from current 4% for 2021 higher (-6.01% in 2020). We believe the revision reflected the recovery in demand from trading partners, supported by stimulus measures across countries as well as better demand from China.

In March, Thailand’s manufacturing production index also rebounded by 4.1% yoy (- 1.1% in February). This was the first positive growth after 23 months since October 2018, where the index has been in negative territory. Going into 2021, we believe that the anticipated rebound in global economic activity following the easing of restrictions, vaccines rollout as well as fiscal and monetary support will continue to support external demand for Thailand’s exports and production.

Separately, Singapore’s inflation rate rose for the fourth consecutive month by 1.3% yoy in March from 0.7% in February, making this its highest rate since May 2017. Similarly, core-inflation increased for the second time in a row by 0.5% yoy (0.2% in February). Headline inflation during the month was lifted by higher cost of private transport, electricity and gas; services and smaller reductions in retail and other goods costs. In a joint statement, Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) guided that this was due to the low base effects from 2020, however, forecasted that the country’s inflation will unlikely accelerate in 2H21, as business cost pressures are contained. Core-inflation is expected to be mildly positive in 2021 in range of between 0-1% (-0.2% in 2020) amid higher oil prices and dissipating downward pressure from government subsidies introduced last year. As for headline inflation, it is expected to average in between 0.5% - 1.5% for 2021. 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. As demand for domestic services gradually picks up, together with disinflationary effects of government subsidies introduced this year, the expectation is for Singapore’s core inflation to turn mildly positive in 2021.

Source: Affin Hwang Research - 30 Apr 2021