● Export growth surged to a 29-month high in March (8.5% YoY; consensus: -0.5%; Feb: -2.6%), lifted by a firmer recovery in the global economic activities.

● By product, the rebound was underpinned by an improved demand for manufacturing goods

- Manufacturing (8.5%; Feb: -4.0%): fastest rise in almost three years driven by a spike in shipments of pickup, bus & truck (120.1%; Feb: -4.3%) and softer decline in exports of unwrought gold (-81.5%; Feb: -93.0%).

- Mineral & fuel (20.1%; Feb: -9.7%): recorded a double-digit expansion, buoyed mainly by a lower base in the refined fuel segment.

● By destination, the increase was due to stronger demand from major advanced and developing economies

- This was led by the EU (31.3%; Feb: 1.9%) and CN (35.4%; Feb: 15.7%).

● Imports moderated in March (14.1%; consensus: 6.0%; Feb: 22.0%) on the absence of a low base effect

- The slowdown was primarily steered by imports of raw materials & intermediates (29.6%; Feb: 41.9%) as well as fuel lubricants (-9.5%; Feb: 10.6%).

● Trade surplus widened to a three-month high (USD0.7b; Feb: USD0.01b), as exports rose (19.8%) at a faster pace compared to imports (16.3%) on a MoM basis.

● 2021 exports forecast retained at between 4.0% to 6.0% (2020: -6.0%)

- This is backed by economic recovery of major trading partners, further progress in the global COVID-19 vaccination drive, technology upcycle and continued fiscal support. However, downside risks remain elevated especially with the resurgence of global COVID-19 cases and a third wave of COVID-19 infections locally.

- We continue to expect the BoT to keep the policy rate unchanged at 0.50%, in line with its goal of preserving the limited policy space and consistent with its emphasis on fiscal and credit measures.

Source: Kenanga Research - 26 Apr 2021