Asean export outlook remains firm; good numbers in Sept for Malaysia, Thailand

ECONOMISTS are modestly upbeat about Asean's export outlook as global reopening continues, amid Malaysia and Thailand posting better-than-expected trade figures for September.

Though Asia's year-on-year export growth may have already peaked amid waning base effects, the easing in Covid-19 restrictions in South-east Asia should boost sequential growth in manufacturing exports in Q4, said Oxford Economics lead Asia economist Sian Fenner in an Oct 28 note.

In Malaysia, Thailand and Vietnam, year-on-year export growth improved as eased restrictions are triggering a pick-up in manufacturing activity. "This is likely to have also contributed to solid gains in Singapore's re-exports in September," she added.

Thailand's trade figures released this week showed exports growing by a stronger-than-expected 17.1 per cent year on year. Citi economist Nalin Chutchotitham sees this as reflecting oil price effects, greater global reopening and the easing of Covid-related factory disruptions.

Thailand's export outlook remains "fairly healthy", she said, noting a September survey indicating expectations that future foreign orders are improving.

But this may not move the needle on the current account balance, as the slow pickup in tourism has not adequately improved the balance of trade for services. She expects a current account deficit of 1.5 per cent of gross domestic product (GDP) in 2021, followed by a surplus of 0.5 per cent in 2022.

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Barclays economists Shreya Sodhani and Brian Tan said September's figures were in line with their expectation for exports to return to first-half strength after Covid-related factory disruptions resolve.

They expect a current account surplus of 0.7 per cent of GDP in 2022, "with the goods-trade surplus likely remaining robust and tourist arrivals picking up".

Maybank Kim Eng analysts Lee Ju Ye and Chua Hak Bin note, however, that rising global oil prices will weigh on Thailand's current account deficit, as it is a net importer.

Malaysia's gross exports grew by a better-than-expected 24.7 per cent in September, resulting in a record trade surplus of RM26.1 billion (S$8.48 billion), even as imports grew 26.5 per cent year on year.

UOB economists Julia Goh and Loke Siew Ting said: "As most countries have further re-opened their economies and global demand continues to recover, Malaysia's trade sector will likely sustain its decent growth momentum in the near term.

"The seventh straight month of robust imports of intermediate goods implies strong export orders ahead of year-end festive demand."

Other positive factors are the resumption of all economic sectors' resumption of full operations capacity starting this month, and the approval granted to bring in 32,000 foreign workers, which should boost firms' capability to meet export orders, they said.

Barclays' Tan sees Malaysia's goods exports as remaining robust, "supported by still-elevated global tech demand and commodity prices".