• Thailand real GDP growth contracted for the fifth consecutive quarter by 2.6% yoy in 1Q21 weighed by lower domestic demand and private consumption from sharp drop in tourism activity
• Thai’s finance ministry lowered its 2021 GDP growth projection to 2.3% from 2.8% due to the third wave of Covid cases
• In Singapore, the country’s non-oil domestic exports (NODX) rose for the fifth straight months to 6.0% yoy in April

Stronger Growth of Exports in Indonesia and Singapore

Thailand’s real GDP growth contracted for the fifth consecutive quarter by 2.6% yoy in 1Q21 but smaller than the decline of -4.2% in 4Q20. The slight improvement was supported by stronger investment, exports and manufacturing. However, the recent 3rd wave of Covid-19 cases provided dimmer outlook for the country, as reflected in lower domestic demand and private consumption from sharp drop in tourism activity. Last month, the Thai’s finance ministry lowered its 2021 GDP growth projection to 2.3% from 2.8% due to the third wave of Covid-19 cases. Although the ministry lowered the projection on arrival of foreign tourists from 5 million previously to 2 million for 2021, we believe there remain downside risks to the country’s tourism business in view of recent rising Covid-19 cases. However, the impact on domestic demand will be cushioned by expected growth, that will be supported by the recovery of merchandised trade, government expenditure and low growth base in 2020. Earlier this week, Thailand government approved an additional 700bn baht (US$22.3bn) borrowing to fund measures for Covid relief on top of the ongoing 1trn baht debt plan made to fund pandemic relief measures in 2020. With the additional borrowing the public debt to GDP ratio may rise to 58.6% by September.

In Singapore, the country’s non-oil domestic exports (NODX) rose for the fifth straight months by 6.0% yoy in April, but lower than 12.1% yoy recorded in March. The electronics export slowed to 10.9% yoy in April compared to 24.4% yoy previously, but non-electronic exports grew at 4.7% almost halved of the expansion 9.4% yoy in previous month. April’s imports rose to 25.9% from 17.9% in March, the second positive growth since April 2020. In the months ahead, we believe Singapore’s NODX will continue to be supported by electronic exports, due to higher demand from China and Asean partners.

Separately, Indonesia’s export growth expanded by 51.9% yoy in April from 30.5% in March, its sixth consecutive month of positive growth. Growth were driven by exports of precious metals, iron and steel. Imports rose by 29.9% yoy during the month compared to 25.7% in March. As a result, the trade balance remained in surplus of US$2.2bn (US$1.6bn in March), its twelfth straight month of trade surplus. On a cumulative basis, Indonesia recorded a higher trade surplus at US$7.7bn in Jan-Apr (US$2.2bn in Jan-Apr 2020) given stronger export demand due to recovery of Covid-19 pandemic in tandem with weaker import demand.

Source: Affin Hwang Research - 20 May 2021