Singapore’s non-oil domestic exports (NODX) for the month of July contracted by 20.2% y-o-y, making this the 10th consecutive month of y-o-y declines. The contraction was also deeper than the Bloomberg median estimate of -14.3%.
In July, electronics and non-electronics exports declined. Electronic NODX fell by 26.1% y-o-y as integrated circuits (ICs), personal computers (PCs) and disk media products contributed the most to the decline at with contractions of 35.7%, 46.1% and 40.8% respectively.
Non-electronic NODX fell by 18.5% y-o-y as non-monetary gold (-80.3%), specialised machinery (-17.2%) and petrochemicals (-22.8%) contributed the most to the decline.
NODX to the top markets fell on the whole with the largest contributors being the EU 27, Taiwan and China at -38.6%, -36.0% and -20.1% respectively.
NODX to the EU 27 fell due to pharmaceuticals (-63.3%), primary chemicals (-88.8%) and specialised machinery (-22.6%) while NODX to Taiwan contracted due to the declines in specialised machinery (-41.9%), ICs (-36.2%) and parts of ICs (-29.6%). NODX to China declined by 20.1% mainly due to ICs (-35.8%), pharmaceuticals (-57.3%) and petrochemicals (-14.0%).
NODX to the US rose.
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On a m-o-m seasonally adjusted basis, NODX fell by 3.4% to $14.0 billion as electronic and non-electronic domestic exports fell.
Non-oil re-exports (NORX) in July fell by 10.7% y-o-y as electronics and non-electronics fell.
Electronic NORX fell by 3.4% due to ICs (-3.9%), parts of PCs (-11.6%) and diodes & transistors (-4.4%).
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Non-electronic NORX fell by 17.9% y-o-y due to non-monetary gold (-87.5%), specialised machinery (-24.5%) and electrical machinery (-28.8%).
NORX to the top markets as a whole declined in July with the top contributors to NORX’s contraction being the EU 27 (-30.3%), Malaysia (-17.8%) and Taiwan (-30.9%).
On a m-o-m seasonally adjusted basis, NORX rose by 3.4% to $29.3 billion as electronics grew, offsetting the decline in non-electronics.
Total trade fell by 20.8% y-o-y in July as both exports and imports decreased.
Total exports declined by 18.4%, following the previous month’s 17.3% decrease while total imports contracted by 23.4%, extending the previous month’s 21.6% decline.
On a m-o-m seasonally adjusted basis, total trade grew by 1.0% to $98.5 billion.
What the economists say…
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July’s NODX, which plunged deeper than the markets expected, affirmed the troubled trade outlook, according to UOB’s senior economist, Alvin Liew.
The figures were, however, somewhat in line with Liew’s more bearish forecast of -19.8%.
“The latest July trade report still reflects the persistent downturn in NODX, and together with the broad-based weakness in both electronics and non-electronics performance, continued to weigh negatively on manufacturing demand for Singapore,” he writes.
“The resumption of NODX declines to North Asian export destinations, especially that of China, weighs negatively on the trade outlook and we maintain our call to expect sustained weakness in global demand amidst an on-going electronics downcycle (which we think has yet to find a bottom). Despite NODX to US turning positive in Jul, we are uncertain if it can be sustained,” he adds.
For 2023, Liew is keeping his forecast for NODX to contract by 10% due to the troubled export outlook. “We continue to expect more y-o-y NODX contractions for a few more months before improving in the later part of 2H2023,” he says.
Liew’s forecast is at the lower end of the government’s revised NODX forecast range of -10.0% to 9.0%.
“To date, NODX in the first seven months of 2023, has contracted by 15.6% y-o-y. A few more months of declines similar to Jul’s magnitude will easily tip the full year 2023 decline beyond the official -10% threshold,” he says.
Maybank Securities analysts Chua Hak Bin and Brian Lee have downgraded their full-year NODX forecast to range between -12% to 9%, versus -9% to -6% previously.
“The sharp fall in exports to China demonstrates that the recovery in exports and manufacturing is fragile and uncertain. China’s domestic demand is rapidly losing steam. Earlier hopes for a China reopening boost is giving way to risk of a China deflationary shock,” they write.
“We maintain our GDP growth forecast at +0.8% in 2023 and +2.2% in 2024. Manufacturing will likely remain tepid in the second half, although there remains hope of a recovery from the deep contractions seen in the first half. Trade volumes in the region appear to be still holding up, even as NODX values are contracting,” they add.
RHB Bank Singapore’s senior economist Barnabas Gan is keeping his full-year NODX forecast at -8.0%, as he expects Singapore’s NODX to contract going into the 3Q2023 before recovering in the 4Q2023.
“We expect NODX’s recovery momentum to sustain into 2H2023. We believe we are at the cusp of a recovery in the US and global growth, with green shoots already evident in the US and Asia ex-Japan. Our proprietary GDP leading index model suggest that Singapore’s GDP growth will accelerate in 3Q2023, following improving business expectations, stock market valuations, and manufacturing purchasing managers’ index (PMI),” Gan writes.
“In our 3Q23 Path Finder report, we identified three drivers for an improving GDP growth momentum recovering global risk appetite, higher tourism figures, and improving high-frequency data seen year-to-date,” he adds.
In his report, Gan also notes that the improving trade momentum to the US and selected Asean economies will help cushion and inject a gradual momentum recovery for Singapore’s trade in the second half of the year despite an expected further slowdown in China’s economic activity over the same period.
