US, China market demand to keep Asean exports afloat in 2021: report

KEY South-east Asian economies are tipped to see a rebound on export strength in 2021, fuelled by demand from major trading partners China and the United States.

Based on high exposure to both markets, Vietnam will lead the trade recovery, followed by Malaysia.

Regional trade hub Singapore will also benefit from its "outsized external sector", economist Jung Sung Eun said in a report on Monday.

The trio will get a lift from short-term demand for semiconductors and pandemic-related medical products, according to Ms Jung, an analyst for Oxford Economics.

"Supply-side factors also support our export outlook, as evidenced by the success of Vietnam in attracting trade diverted from China," she added.

Oxford Economics had earlier ranked Vietnam and Malaysia as the most attractive destinations in Asia for export-oriented foreign direct investment.

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Meanwhile, Malaysian exports are expected to benefit the most from the semiconductor boom and Singapore will reap rewards from shipments of Covid-19 medical items.

"Robust corporate investment growth in China should benefit Vietnam and Singapore, given their significant capital goods exports to China," the report added, predicting that these two countries "will enjoy a boost in Chinese demand for capital goods".

On the other hand, Ms Jung observed that the economic gains from a trade recovery "might be offset for those (economies) more exposed to South Asia and South-east Asia", such as Indonesia, Malaysia and Singapore.

Indonesia and the Philippines may also lose out on manufacturing competitiveness, as the report warned of "weak infrastructure and business conditions".

"Plugging into global supply chains, especially as firms adjust to rising costs in China, will have a significant impact on the manufacturing production of the Asean-6," it said.

While "exports will make a positive contribution to growth" in 2021 across the Asean-6 economies of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, the report concluded that the boost will be uneven, with the Philippines still a laggard.