• Exports moderated in January (0.3% YoY; consensus: 1.9%; Dec: 4.7%), but remained in the positive territory for two straight months.
   
• By product, the softer growth was attributed to the shipments of manufacturing and agricultural goods
  • Manufacturing (0.9%; Dec: 6.7%): expansion slowed, reflecting a high base in the unwrought gold segment (- 90.3%; Dec: -21.7%). Meanwhile, electronic exports continued to chart a double-digit growth (13.0%) buoyed by the technology upcycle.
     
  • Agricultural (9.6%; Dec: 10.7%): growth eased marginally on a moderation in rubber (1.5%; Dec: 30.0%) and rice exports (-15.9%; Dec: -0.1%).
     
• By destination, the slowdown was due to lower demand growth from major advanced economies and regional peers
  • - This was led by the ASEAN-5 (-10.7%; Dec: 0.6%), Japan (7.3%; Dec: 14.8%) and the EU (-6.9%; Dec: -1.5%).
     
• Imports reverted into a contraction (-5.2%; consensus: -8.3%; Dec: 3.6%) partly due to a higher base in the preceding year
  • Excluding arms & munitions, the worsened performance was broadly based, steered by imports of capital goods (-10.6%; Dec: 8.9%) and fuel lubricants (-30.1%; Dec: -17.3%) as demand and sentiment were weighed by the tightened lockdown measures in January.
     
• Trade balance switched to a deficit for the first time in 12 months (-USD0.2b; Dec: USD1.0b), as exports declined (-1.9%) while imports expanded (4.1%) on a MoM basis.
   
• We reiterate our expectation of a rebound in exports this year (4.0-6.0%; 2020: -6.0%)
  • Underscored by continued economic recovery at the global front, amid tapering COVID-19 infections and mass rollout of COVID-19 vaccine, as well as the global technology upcycle in line with the 5G deployment and the prolonged work-from-home trend.
     
  • Policy-wise, we expect the BoT to keep the policy rate unchanged (0.50%), amid the prospect of a recovery in economic activity following the relaxation of COVID-19 curbing measures locally beginning early February.

Source: Kenanga Research - 24 Feb 2021