SINGAPORE -- Strong global demand for smartphones and gadgets amid COVID-19 isolation measures is lifting some Southeast Asian economies while others continue to suffer because of weak manufacturing.
Malaysia reported Friday that exports surged 63% year-on-year to a record 105.6 billion ringgit ($25.5 billion) in April. The jump was fueled by semiconductors and other electronic products, which accounted for a third of all outbound shipments.
International consumers have been shopping for new electronics and digital devices while they stay under coronavirus lockdown, giving a boost to Malaysia, a hub of chipmakers and IT companies.
"Malaysia is the United States' largest semiconductor trading partner with a 24% share, thereby establishing Malaysia as a leading hub for assembly, test and packaging, and a growing destination for semiconductor equipment and toolmakers," International Trade and Industry Deputy Minister Lim Ban Hong told a newly formed chip trade group last month.
With China and the U.S. driving a rebound in the global economy, Malaysia is benefiting from having them as top buyers of its products. The Southeast Asian country's gross domestic product from manufacturing expanded 6.6% in the first quarter of 2021, helping to improve overall GDP to negative growth of just 0.5% from the 3.4% contraction from the preceding quarter. For the full year, overall GDP is projected to rise at a pace of 6% to 7.5%.
The same mechanism is working for Vietnam and Singapore. Vietnam is getting a boost from robust exports to the U.S. by manufacturers, including by a Samsung Electronics smartphone subsidiary, and reported GDP growth of 4.48% for the first quarter.
Singapore has upgraded the first quarter GDP to a gain of 1.3% from the preliminary estimate of 0.2%, supported by increased production at electric and precision machinery builders and chemicals companies. While both Vietnam and Singapore have tightened COVID-19 measures of late, dealing a blow to restaurant and other service industries, this slump will likely be offset by the strong performance of the manufacturing sector.
Meanwhile, countries mired in deeper GDP contractions lack manufacturing as the driver of an economic recovery. The Philippines' GDP shrank 4.2% in the first quarter, with construction posting a 24% slide and the real estate industry logging a 13% decline. Manufacturing managed to edge up 0.5% but this was not enough to offset the stagnation elsewhere. Even in Thailand, nicknamed the Detroit of Asia, manufacturing's nascent 0.7% rise failed to make up for the devastation in tourism. Thai GDP fell 2.6%.
Adding to the concerns about the region are the slow coronavirus vaccine rollouts, except for Singapore. Border reopenings are expected to be delayed compared with Western countries, likely keeping tourism and other service industries in a slump. The outlook is particularly gloomy for countries without exports-driven economies. The Philippines has slashed its 2021 GDP growth projection to a range between 6% and 7% from the previous level of 6.5% to 7.5%.