Singapore’s non-oil domestic exports (NODX) continued their upward trend, logging a sixth consecutive month of growth.
According to official data released on June 17 by trade agency Enterprise Singapore (ESG), NODX grew 8.8% y-o-y in May, higher than the 6% growth reported for April.
The non-electronics sectors continue to support NODX growth, increasing 8.1% in May compared to 4.7% growth in June. Specialised machinery, petrochemicals and primary chemicals were the biggest contributors to the growth.
Electronic NODX also rose in May, climbing 11% y-o-y, driven by ICs, diodes & transistors and telecommunications equipment
On a seasonally adjusted m-o-m basis, NODX remained relatively flat at $15.4 billion, representing a 0.1% decline. In comparison, NODX decreased 8.8% the previous month.
Singapore’s NODX to its top 10 markets increased overall in May, despite a continued decline in exports to the US, Japan and the EU 27, which fell 1.2%, 23.4% and 34.8% on a y-o-y basis respectively. In April, NODX to these markets had declined 30.2%, 33.2% and 42.3% respectively.
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The largest contributors to the rise in NODX were China (+36.9%), Hong Kong (+30.2%) and Malaysia (+27.1%). NODX to Taiwan, Indonesia and Thailand also saw growth, while NODX to South Korea declined.
NODX to emerging markets (EMs) expanded by 41.4% during the month, narrower than April’s increase of 70.4% y-o-y.
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Meanwhile, Singapore’s non-oil re-exports (NORX) grew 31.6% y-o-y in May to $28.6 billion, as both electronics and non-electronics NORX rose 34.5% and 28.2% respectively, coming from a low base the previous year.
The rise in electronic NORX was due to ICs (+41.9%), telecommunications equipment (+23.2%) and parts of PCs (+22.9%), while the rise in non-electronic NORX was driven by specialised machinery (+114.5%), non-monetary gold (+131.4%) and non-electric engines & motors (+23.5%).
With the exception of the EU 27, NORX to Singapore’s top 10 markets grew, with Hong Kong (+60.0%), China (+37.2%) and Malaysia (+27.3%) being the major contributors.
On a seasonally adjusted m-o-m basis, NORX reversed from a decline of 1.4% in April to 0.8% growth in May, with electronic re-exports outweighing a decline in non-electronic re-exports.
In response to the data, economists are cautiously optimistic.
Michelle Chia and Terence Lee, economists from CGS-CIMB Research, note that NODX in May surpassed their forecasts, despite underperforming Bloomberg consensus estimates.
They maintain that Singapore is showing strong prospects in its economic recovery, given its vaccination rates being among the fastest in Asia.
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The gradual re-opening of the economy is anticipated to support both an export-led rebound as well as domestic demand. "We reiterate our forecasts for Singapore’s NODX at +6.9% and GDP growth at +5.3% in 2021," they remark.
UOB economist Barnabas Gan sees the expansion in overall exports for Singapore underlined by the continued recovery in global trade demand.
He expects robust demand for semiconductor demand to continue supporting Singapore's external-facing industries, while higher oil prices will also likely lift overall export value for the year ahead.
"Given the strengthening exports to Singapore’s key trading partners, this also suggests that trade demand in the region as a whole has continued to stay buoyant, a remarkable feat despite the rise in COVID-19 infections in several economies," he comments.
Sin Beng Ong, JP Morgan's head of Asean economic research, similarly anticipates trade to continue to lift in 2021, though he highlights certain things to look out for. "Given the expected recovery in the rest of the world, our view remains that the underlying recovery in goods demand will continue though mixed in with periodic volatility, although the recent NODX weakness together with the moderation in the capex nowcaster bear watching," he says.
Meanwhile, Oxford Economics' Sung Eun Jung has a more measured view. He notes that export and import volumes "lost steam" in May, indicating a further slowing down in sequential momentum. "We still think the strong global growth will benefit Singapore’s external outlook, with exports growing sharply this year. But the trade momentum could be slower after a remarkably strong Q1. Moreover, the global chip shortage and sustained weak performance of pharmaceutical exports are downside risks to Singapore’s trade recovery," the economist explains.
RHB Group's research team also cautions on disruptions in the global supply chain - as indicated by rising Purchasing Managers' Index (PMI) readings for order backlog and supplier deliveries - potentially dragging export performance. "Despite renewed global confidence in passing the pandemic hurdle, uncertainties remain for exporters. The risk of a resurgence in infectivity from new virus variants, faster than the rollout of vaccines, persist to cloud over recovery," the team says.
Photo: Bloomberg
