Economic Update

Alan Tan Chew Leong T (603) 2146 7540 E alan.tan@affinhwang.com

Naomi Margaret Kasimir T (603) 2146 7532 E naomi.kasimir@affinhwang.com

Mas Aida Che Mansor T (603) 2146 7489 E aida.mansor@affinhwang.com

ASEAN Weekly Wrap

Indonesia to reimpose restriction movement

Indonesia’s retail sales fell for the eighth consecutive month in July by 12.3% compared to -17.1% in June. The re-imposition of partial lockdowns could

derail the recovery of the economy and dampen retail sales

Philippines’ export growth declined for the fifth consecutive month by 9.6%

yoy in July from -12.5% in June, while imports also declined by 24.4% yoy

in July from -23.1% in June

Singapore’s retail sales in July contracted by 8.5% yoy from -27.7% in June

Bleak economic recovery in Indonesia may dampen retail sales going forward

Indonesia’s authority announced that Jakarta will reimpose movement restrictions

and into partial lockdown from 14 September due to the recent rise in Covid-19

cases. We believe this will impact economic activity until the public health in within

control. The recent rise in cases were detected in public places i.e. restaurants and

public transport. As such, we expect the re-imposition of partial lockdowns could

derail the recovery of the economy and possibly leading to the country’s GDP growth

missing the government’s revised target range of -1.1% to +2% in 2020 (5.0% in

2019). According to Bank Indonesia’s retail sales survey, the country’s retail sales

fell for the eighth consecutive month in July by 12.3% albeit at a slower pace

compared to -17.1% in June, as all categories had registered slower declines in July

with the exception of stationary and communication. The slower decline in food,

beverage and tobacco of -1.9% yoy (-7.6% in June) mitigated some of the decline in

retail sales. Slower decline in sales reflect improvement in economic activity, as most

regions have eased or lifted their lockdown measures since 5th June 2020. In April

and May, Jakarta imposed restrictions that were eased in June. With the recent

reinstatement of movement restrictions in the capital, we believe any recovery in

retail sales will be delayed until the lifting of the lockdown measures.

In Singapore, consumer sentiment and spending remained weak as retail sales in

July contracted by 8.5% yoy, albeit smaller decline than -27.7% in June. As for retail

sales excluding motor vehicles, it fell by 7.7% yoy in July from -24.0 in June. The

slight improvement in sales reflects the impact of the relaxation of the circuit breaker

measures in late June. Retail sales may be bolstered somewhat by pent-up demand.

However, we believe weak labour market conditions may continue to dampen

consumer demand amid lower purchasing power.

Meanwhile in the Philippines, export growth declined for the fifth consecutive month

by 9.6% yoy in July from -12.5% in June, while imports also declined by 24.4% yoy

in July from -23.1% in June. The country’s trade deficit widened to US$1.8bn in July

compared to US$1.4bn in the previous month. The slower pace of contraction in

exports during the month reflects a gradual improvement, as other countries have

also been gradually reopening their economies and easing containment restrictions.

In 2Q20, Philippines’ economy contracted by 16.5% (-0.2% in 1Q20), its deepest

decline since 1981. So far, the government has launched a fiscal package worth

PHP595.6bn accounting for about 3.1% of GDP and on August 20 and approved a

stimulus package worth PHP165bn to further support the country’s economic

recovery.

Fig 1: ASEAN economic releases (4 – 10 September 2020) OCT NOV DEC JAN FEB MAR APR MAY JUNE JULY 2019 2019 2019 2020 2020 2020 2020 2020 2020 2020 PHILIPPINES Exports (%yoy) 0.5 -0.2 21.6 9.4 2.8 -24.7 -49.9 -26.9 -12.5 -9.6 Imports (%yoy) -7.6 -4.5 -2.1 -2.8 -11.6 -26.2 -65.3 -40.6 -23.1 -24.4 Trade balance (US$bn) -3.6 -3.7 -3.0 -3.5 -1.7 -2.4 -0.4 -1.3 -1.4 -1.8 SINGAPORE Retail sales (% yoy) -4.4 -4.4 -3.5 -6.3 -8.5 -13.5 -40.2 -51.8 -27.7 -8.5 Retail sales ex auto (% yoy) -0.6 -1.0 0.0 -0.6 -10.0 -10.1 -32.4 -44.9 -24.0 -7.7 INDONESIA

Retail sales (% yoy) 3.6 1.3 -0.5 -0.3 -0.8 -4.5 -16.9 -20.6 -17.1 -12.3 Source: All data from IMF, Bloomberg and CEIC, consensus from Bloomberg

11 September 2020

“We believe any recovery in Indonesia’s retail sales will be delayed until the lifting of the lockdown measures”

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Appendix I: ASEAN economic charts (4 – 10 September 2020)

Source: All data for charts sourced from CEIC

Chart 1: Philippines’ trade balance Chart 2: Philippines’ export breakdown

Chart 3: Singapore’s retail sales Chart 4: Singapore’s retail sales breakdown

Chart 5: Indonesia’s retail sales Chart 6: Indonesia’s consumer confidence

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Appendix II: Monthly ASEAN economic data trend

SEP 2019

OCT 2019

NOV 2019

DEC 2019

JAN 2020

FEB 2020

MAR 2020

APR 2020

MAY 2020

JUN 2020

JUL 2020

AUG 2020

MALAYSIA

CPI (%yoy) 1.1 1.1 0.9 1.0 1.6 1.3 -0.2 -2.9 -2.9 -1.9 -1.3 -

Core CPI (%yoy) 1.5 1.4 1.4 1.4 1.6 1.3 1.3 1.3 1.1 1.2 1.1 -

IPI (%yoy) 1.5 0.1 2.1 1.3 0.6 6.2 -4.9 -32.0 -21.6 -0.4 - -

Exports (%yoy) -6.1 -6.4 -5.4 2.8 -2.6 10.0 -6.5 -24.9 -26.0 8.0 3.1 -

Imports (%yoy) 2.5 -8.7 -3.6 1.0 -2.5 11.3 -2.7 -8.0 -30.4 -5.6 -8.7 -

Trade balance (US$bn) 2.1 4.2 1.6 3.0 3.0 3.0 2.9 -0.8 2.4 4.9 5.9 -

Foreign reserves (US$bn) 103.0 103.2 103.2 103.6 104.2 103.4 101.7 102.5 102.9 103.4 104.2 104.4

INDONESIA

CPI (%yoy) 3.1 2.9 2.7 2.6 2.7 3.0 3.0 2.7 2.2 2.0 1.5 1.3

Core CPI (%yoy) 3.3 3.2 3.1 3.0 2.9 2.8 2.9 2.8 2.6 2.3 2.1 2.0

Exports (%yoy) -5.9 -6.5 -6.1 1.0 -2.8 9.9 -2.6 -6.9 -29.1 2.1 -10.1 -

Imports (%yoy) -2.4 -16.5 -9.2 -5.6 -4.9 -7.4 -2.9 -18.6 -42.2 -6.4 -32.6 -

Trade balance (US$bn) -0.2 0.1 -1.4 -0.1 -0.6 2.5 0.7 -0.4 2.0 1.2 3.2 -

Foreign reserves (US$bn) 124.3 126.7 126.6 129.2 131.7 130.4 121.0 127.9 130.5 131.7 135.1 137.0

PHILIPPINES

CPI (%yoy) 0.9 0.8 1.3 2.5 2.9 2.6 2.5 2.2 2.1 2.5 2.7 2.4

IPI (%yoy) -6.5 -5.8 -7.2 -6.8 -1.4 2.2 -12.7 -41.3 -27.3 -16.0 -14.8 -

Exports (%yoy) 0.4 0.5 -0.2 21.6 9.4 2.8 -24.7 -49.9 -26.9 -12.5 -9.6 -

Imports (%yoy) -5.8 -7.6 -4.5 -2.1 -2.8 -11.6 -26.2 -65.3 -40.6 -23.1 -24.4 -

Trade balance (US$bn) -3.4 -3.6 -3.7 -3.0 -3.5 -1.7 -2.4 -0.4 -1.3 -1.4 -1.8 -

Foreign reserves (US$bn) 85.6 85.8 86.2 87.8 86.9 88.2 88.8 90.9 93.3 93.5 98.6 -

SINGAPORE

CPI (%yoy) 0.4 0.5 0.6 0.8 0.8 0.3 0.0 -0.7 -0.8 -0.5 -0.4 -

IPI (%yoy) -1.4 3.9 -12.3 -3.7 3.4 -1.0 21.0 11.8 -8.2 -6.5 -8.4 -

Non-oil domestic exports (%yoy) -8.1 -12.5 -5.9 2.4 -3.3 3.0 16.6 9.7 -4.6 13.9 6.0 -

Electronic exports -24.8 -16.4 -23.3 -21.3 -13.0 2.5 5.8 -0.6 12.4 22.2 2.8 -

Imports (%yoy) -4.8 -10.3 -5.8 -2.3 -0.9 9.4 0.2 -13.1 -26.2 -9.9 -9.9 -

Trade balance (US$bn) 2.9 3.3 2.4 2.6 0.7 1.0 2.4 1.8 2.8 3.3 2.8 -

Foreign reserves (US$bn) 272.2 276.8 276.0 279.5 278.6 283.0 279.1 301.8 301.0 312.5 321.4 327.5

THAILAND

CPI (%yoy) 0.3 0.1 0.2 0.9 1.1 0.7 -0.5 -3.0 -3.4 -1.6 -1.0 -0.5

Core CPI (%yoy) 0.4 0.4 0.5 0.5 0.5 0.6 0.5 0.4 0.0 0.0 0.4 0.3

IPI (%yoy) -5.0 -8.0 -8.0 -4.4 -4.0 -4.2 -10.5 -18.2 -23.8 -17.8 -14.7 -

Exports (%yoy) -1.7 -4.5 -7.4 -1.2 3.3 -4.5 4.2 2.1 -22.5 -23.2 -11.4 -

Imports (%yoy) -4.6 -7.7 -14.0 1.9 -7.9 -4.3 7.2 -17.2 -34.4 -18.1 -26.4 -

Trade balance (US$bn) 1.3 0.5 0.6 0.7 -1.6 3.9 1.6 2.5 2.7 1.6 3.3 -

Foreign reserves (US$bn) 220.5 222.8 221.0 224.3 230.3 229.5 226.5 235.7 237.2 241.6 250.4 -

REAL GDP (%yoy) 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

MALAYSIA 6.1 5.8 5.2 4.7 4.4 4.8 4.5 4.8 4.4 3.6 0.7 -17.1

INDONESIA 5.1 5.2 5.1 5.3 5.2 5.2 5.1 5.1 5.0 5.0 3.0 -5.3

PHILIPPINES 7.5 6.6 6.5 6.4 6.1 6.4 5.7 5.4 6.3 6.7 -0.2 -16.5

SINGAPORE 5.1 4.5 4.8 4.9 3.0 1.3 1.0 0.2 0.7 1.0 -0.3 -13.2

THAILAND 4.4 4.0 5.0 4.6 3.2 3.8 2.9 2.4 2.6 1.5 -1.8 -12.2 Source: Bloomberg, CEIC

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Appendix III: ASEAN Economic Calendar for September 2020

September 2020

Monday Tuesday Wednesday Thursday Friday

1 2 3 4

MY Aug. Markit PMI SG Aug. Markit PMI MY Aug. 28 Reserves

ID Aug. Markit PMI PH Aug. CPI

ID Aug. CPI SG Jul. Retail Sales

PH Aug. Markit PMI TH Aug.28 Reserves

TH Aug. Markit PMI

7 8 9 10 11

ID Aug. Reserves MY MPC Meeting MY Jul. IPI

PH Aug. Reserves PH Jul. Trade TH Sep.4 Reserves

SG Aug. Reserves

TH Aug. CPI

14 15 16 17 18

ID Aug. Trade ID MPC Meeting

SG Aug. NODX

21 22 23 24 25

MY Aug. CPI SG Aug. IPI

SG Aug. CPI TH Sep.18 Reserves

TH Aug. Trade

TH MPC Meeting

28 29 30

MY Aug. Trade TH Aug. Trade

ID=Indonesia, MY=Malaysia, PH=Philippines, SG=Singapore, TH=Thailand Dates for indicators are subject to change

Source: Bloomberg

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