• Exports fell for the first time in three months in February (-2.6% YoY; consensus: -1.5%; Jan: 0.3%), primarily due to a high base effect and the Lunar New Year holidays.
   
• By product, the contraction was attributed to the shipments of manufacturing and agro-industrial goods
  • Manufacturing (-4.0%; Jan: 0.9%): steepest YoY decline in four months, due to a negative turnaround in shipment of motor vehicles (-3.5%; Jan: 18.8%) and aircraft parts (-92.3%; Jan: 82.6%).
     
  • Agro-industrial (-4.8%; Jan: -3.2%): growth was dragged by a double-digit contraction in exports of canned tunas (-20.3%; Jan: -0.6), in part reflecting a higher base in the preceding year.
     
• By destination, the slowdown was due to softer demand from regional peers during the festive month.
  • This was led by the ASEAN-5 (-17.2%; Jan: -10.7%) and HK (-36.7%; Jan: 23.4%).
     
• Imports surged to a 30-month high (22.0%; consensus: 11.2%; Jan: -5.2%), buoyed by a low base effect
  • Excluding arms & munitions, the spike in growth was broadly based, steered by imports of raw materials & intermediates (41.9%; Jan: 10.0%).
     
• Trade balance reverted to chart a marginal surplus of USD0.01b (Jan: -USD0.2b), as exports rose (2.6%) at a faster pace compared to imports (1.5%) on a MoM basis.
   
• We continue to expect further recovery in exports this year (4.0-6.0%; 2020: -6.0%)
  • This is backed by economic recovery of major trading partners, greater rollout of COVID-19 vaccine, additional stimulus injections globally as well as the technology upcycle.
     
  • We expect the BoT to hold the policy rate steady at 0.50% against the prospect of growth recovery supported by the ongoing vaccination drive and the extended fiscal measures.

Source: Kenanga Research - 26 Mar 2021