ACCOUNT PROFILE

Message from Secretary General_September 2021

Posted on 05 October 2021

Since our last article on the COVID situation in ASEAN, cases in Indonesia have fallen dramatically to less than 7,000/day. Singapore has vaccinated more than 80% of its population and for Malaysia, it is more than 50%. However, challenges remain in ASEAN as the Delta cases continue to rise.

ASEAN-6 GDP in Q2 2021

The second quarter marked an expansion in economic activities across all ASEAN-6 countries. 

Indonesia’s GDP expanded 7.1% in Q2 2021 after 4 quarters of contraction. The real GDP in Q2 2021 exceeded the pre-pandemic real GDP in Q4 2019. Growth in Q2 2021 was driven mainly by higher exports (31.8%), household consumption due to less restrictions, holidays and macro-prudential policy (5.9%), investments in the non-building sector (7.5%) and govern-ment consumption for the national recovery programme (8.1%).

Malaysia’s GDP rose 16.1% in Q2 2021 also after 4 quarters of contrac-tion. Q2 2021 GDP growth was higher due to the low base recorded Q2 2020. The positive growth was also supported by the continuous growth in manufacturing sector and the rebound of services sector. 

The Philippine GDP grew 11.8% in the Q2 2021, the highest growth since Q4 1988. The main drivers to growth were: Manufacturing (22.3%), Construction (25.7%) and Wholesale and retail trade, repair of motor vehicles and motorcycles (5.4%).

The Singapore economy expanded by 14.7% in Q2 2021, faster than the 1.5% growth in Q1 2021. The strong Q2 growth was largely due to the low base in Q2 2020, when GDP fell by 13.3% caused by lockdown measures in April and May 2020, as well as the fall in external demand amidst the pandemic. Q2 2021 GDP remains around 0.6 % lower than pre-pandemic levels in Q2 2019.

In Thailand, GDP grew 7.5% in Q2 2021 recovering from a fall of 2.6% in Q1 2021. The improvement reflected positive contributions from both agricultural and non-agriculture sectors, especially the production of export-oriented goods sector. The expansion partly due to a low base in Q2 2020 (12.1% contraction). The non-agriculture sector expanded 8.1%, due to growth in the industrial (14.2%) and the service (5%) sectors. 

Vietnam’s GDP in Q2 2021 was estimated to rise by 6.6% Q2 2020, higher than 0.4% in Q2 2020 but lower than the 6.73% in Q2 2018 and 2019. The industry and construction sector increased by 10.3% and the service sector increased by 4.3%. 

ASEAN-6 Construction Sectors

Q2 2021 construction sector also expanded across ASEAN-6 countries, partly due to a low base in Q2 2020 and due to the restarting of public construction works. 

The construction sector expanded 4.4% in Q2 2021, as Indonesia enjoyed a lull in COVID cases of around 5,000/day between March and June 2021, and construction activities continued to grow. 

The Malaysian construction sector expanded 40.3% (y-o-y) backed by specialised construction and civil engineering activities which grew 58.1% and 50.0% respectively. Also, the non-residential (34.8%) and residential (16.3%) buildings sub-sectors also improved this quarter. However, the sector declined 8.8% in Q2 due to more restrictions.

In Singapore, the construction sector grew 106% (y-o-y), a sharp turnaround from the 23% contraction in the previous quarter, as both public and private sector construction works expanded. The strong growth was due to low base effects as most construction activities were suspended last year.

The Thailand construction sector grew 5.1%, in Q2 2021 compared to 12.7% in Q1 2021. Public construction grew slower due to slower disbursement for land and building items. State enterprise construction also decelerated due to no new projects entering the construction phase amid ongoing projects. Private construction decreased across all construction types (except industrial).

In Vietnam, the construction sector grew 4.3% in Q2 2021, as public infrastructure works accelerated under both the government initiatives and the public-private partnership model. 

ASEAN-6 Manufacturing Activities

The ASEAN-6 manufacturing sectors have continued to expand in Q2 2021.

In Malaysia, the manufacturing sector grew at a 26.6% in Q2 2021, driven by petroleum, chemicals, rubber & plastics products (28.0%) and electrical, electronic & optical products (26.3%), which are mostly for export. The higher growth was also attributed by the increase in transport equipment, other manufacturing & repair (41.6%) and non-metallic mineral products, base metals & fabricated metal products (33.5%).

The manufacturing sector in Singapore expanded 18% in Q2 2021, extending the 11% growth in Q1 2021. Growth was supported by expansions in all manufacturing clusters, with the transport engineering (30%) and precision engineering (24%) clusters being the fastest.

The Philippine manufacturing sector grew 22.3% across all sub-industries, mainly from computer, electronic and optical products (47.5%), food products (6.7%), chemical and chemical products, (42.3%), other non-metallic mineral products (87.2%) and basic metals (55.1%).

The Thailand manufacturing sector increased by 16.8%, accelerating from 1.0% in Q1/2021. The significant increase reflected increases in all industrial categories: light industry (9%), raw material industry including basic metals and fabricated metal products (10.3%) and capital and technology industry including electrical equip-ment, machinery and motor vehicles (39.8%), boosted by export-goods production in response to reviving external demand and recovering domestic demand. In addition, the low base effect compared to Q2 2020 partly contributed to the expansion.
The manufacturing sector in Vietnam continued to grow strongly at 13.8% in Q2 2021, after a 8.9% growth in Q1 2021. This is in spite of a few clusters of outbreaks in key economic zones as the Government continues to balance health and safety as well as economic development.

Notwithstanding the positive Q2 2021 performance, the Delta variant is expected to affect ASEAN economies adversely in Q3 2021. Still, ASEAN economies are expected expand in 2021, with the growth depending on vaccination rollout and the control of the pandemic.

Get Vaccinated. Wear A Mask. Keep Your Distance. Stay Safe.

Since our last article on the COVID situation in ASEAN, cases in Indonesia have fallen dramatically to less than 7,000/day. Singapore has vaccinated more than 80% of its population and for Malaysia, it is more than 50%. However, challenges remain in ASEAN as the Delta cases continue to rise.

ASEAN-6 GDP in Q2 2021

The second quarter marked an expansion in economic activities across all ASEAN-6 countries. 

Indonesia’s GDP expanded 7.1% in Q2 2021 after 4 quarters of contraction. The real GDP in Q2 2021 exceeded the pre-pandemic real GDP in Q4 2019. Growth in Q2 2021 was driven mainly by higher exports (31.8%), household consumption due to less restrictions, holidays and macro-prudential policy (5.9%), investments in the non-building sector (7.5%) and govern-ment consumption for the national recovery programme (8.1%).

Malaysia’s GDP rose 16.1% in Q2 2021 also after 4 quarters of contrac-tion. Q2 2021 GDP growth was higher due to the low base recorded Q2 2020. The positive growth was also supported by the continuous growth in manufacturing sector and the rebound of services sector. 

The Philippine GDP grew 11.8% in the Q2 2021, the highest growth since Q4 1988. The main drivers to growth were: Manufacturing (22.3%), Construction (25.7%) and Wholesale and retail trade, repair of motor vehicles and motorcycles (5.4%).

The Singapore economy expanded by 14.7% in Q2 2021, faster than the 1.5% growth in Q1 2021. The strong Q2 growth was largely due to the low base in Q2 2020, when GDP fell by 13.3% caused by lockdown measures in April and May 2020, as well as the fall in external demand amidst the pandemic. Q2 2021 GDP remains around 0.6 % lower than pre-pandemic levels in Q2 2019.

In Thailand, GDP grew 7.5% in Q2 2021 recovering from a fall of 2.6% in Q1 2021. The improvement reflected positive contributions from both agricultural and non-agriculture sectors, especially the production of export-oriented goods sector. The expansion partly due to a low base in Q2 2020 (12.1% contraction). The non-agriculture sector expanded 8.1%, due to growth in the industrial (14.2%) and the service (5%) sectors. 

Vietnam’s GDP in Q2 2021 was estimated to rise by 6.6% Q2 2020, higher than 0.4% in Q2 2020 but lower than the 6.73% in Q2 2018 and 2019. The industry and construction sector increased by 10.3% and the service sector increased by 4.3%. 

ASEAN-6 Construction Sectors

Q2 2021 construction sector also expanded across ASEAN-6 countries, partly due to a low base in Q2 2020 and due to the restarting of public construction works. 

The construction sector expanded 4.4% in Q2 2021, as Indonesia enjoyed a lull in COVID cases of around 5,000/day between March and June 2021, and construction activities continued to grow. 

The Malaysian construction sector expanded 40.3% (y-o-y) backed by specialised construction and civil engineering activities which grew 58.1% and 50.0% respectively. Also, the non-residential (34.8%) and residential (16.3%) buildings sub-sectors also improved this quarter. However, the sector declined 8.8% in Q2 due to more restrictions.

In Singapore, the construction sector grew 106% (y-o-y), a sharp turnaround from the 23% contraction in the previous quarter, as both public and private sector construction works expanded. The strong growth was due to low base effects as most construction activities were suspended last year.

The Thailand construction sector grew 5.1%, in Q2 2021 compared to 12.7% in Q1 2021. Public construction grew slower due to slower disbursement for land and building items. State enterprise construction also decelerated due to no new projects entering the construction phase amid ongoing projects. Private construction decreased across all construction types (except industrial).

In Vietnam, the construction sector grew 4.3% in Q2 2021, as public infrastructure works accelerated under both the government initiatives and the public-private partnership model. 

ASEAN-6 Manufacturing Activities

The ASEAN-6 manufacturing sectors have continued to expand in Q2 2021.

In Malaysia, the manufacturing sector grew at a 26.6% in Q2 2021, driven by petroleum, chemicals, rubber & plastics products (28.0%) and electrical, electronic & optical products (26.3%), which are mostly for export. The higher growth was also attributed by the increase in transport equipment, other manufacturing & repair (41.6%) and non-metallic mineral products, base metals & fabricated metal products (33.5%).

The manufacturing sector in Singapore expanded 18% in Q2 2021, extending the 11% growth in Q1 2021. Growth was supported by expansions in all manufacturing clusters, with the transport engineering (30%) and precision engineering (24%) clusters being the fastest.

The Philippine manufacturing sector grew 22.3% across all sub-industries, mainly from computer, electronic and optical products (47.5%), food products (6.7%), chemical and chemical products, (42.3%), other non-metallic mineral products (87.2%) and basic metals (55.1%).

The Thailand manufacturing sector increased by 16.8%, accelerating from 1.0% in Q1/2021. The significant increase reflected increases in all industrial categories: light industry (9%), raw material industry including basic metals and fabricated metal products (10.3%) and capital and technology industry including electrical equip-ment, machinery and motor vehicles (39.8%), boosted by export-goods production in response to reviving external demand and recovering domestic demand. In addition, the low base effect compared to Q2 2020 partly contributed to the expansion.
The manufacturing sector in Vietnam continued to grow strongly at 13.8% in Q2 2021, after a 8.9% growth in Q1 2021. This is in spite of a few clusters of outbreaks in key economic zones as the Government continues to balance health and safety as well as economic development.

Notwithstanding the positive Q2 2021 performance, the Delta variant is expected to affect ASEAN economies adversely in Q3 2021. Still, ASEAN economies are expected expand in 2021, with the growth depending on vaccination rollout and the control of the pandemic.

Get Vaccinated. Wear A Mask. Keep Your Distance. Stay Safe.

Yeoh Wee Jin

REFERENCE TABLES
Legend

Table 1: GDP Growth in ASEAN-6 Countries

Table 2: Construction Growth in ASEAN-6 Countries

Table 3: Manufacturing Growth in ASEAN-6 Countries

Table 4: Forecasts for ASEAN-6 Countries

Source : SEAISI