SINGAPORE (May 18): Against expectations of a slowdown from the Covid-19 outbreak, Singapore’s non-oil domestic exports (NODX) continued its growth trajectory in April following a sharp increase in pharmaceutical shipments.
Official figures released by trade agency Enterprise Singapore on Monday pointed to a 9.7% y-o-y growth in April, compared to a 17.6% expansion logged in March.
Singapore’s latest export figures beat the 5% decline forecast by private-sector economists in a Reuters poll. This follows expectations of a slowdown in global trade following lockdowns and movement restrictions which have disrupted global supply chains.
Specifically, the increase in Singapore’s NODX was led by a 12.8% growth in non-electronic exports, which eased from the 20.5% expansion logged by the segment in March. This comes on the back of increases in the export of pharmaceuticals (+66.3%), food preparations (+66.3%) and non-monetary gold (+25.0%).
“Pharmaceuticals formed the bulk of the growth in NODX in April 2020, growing from the low base a year ago,” the trade agency said.
“NODX of pharmaceuticals as about $0.9 billion in April 2019, was lower than the 2019 average of $1.4 billion. Pharmaceuticals NODX are typically volatile in nature and subject to fluctuations across months”.
Meanwhile, electronic exports dipped by a smidgen 0.6%, reversing into the red from its 5.8% growth in the previous month. The poorer performance follows a decline in the exports of PCs, diodes & transistors and disk drives by 44.3%, 13.2% and 32.9% respectively.
On a month-on-month seasonally adjusted basis, NODX was down 5.8%, after the 12.8% gain posted the previous month. This follows a dip in both electronic and non-electronic exports, bringing April’s NODX to $14.9 billion, from the previous month’s $15.8 billion.
Even so, Singapore’s NODX to five of its top 10 markets increased in April, with exports to the US (+124.0%), the EU 27 (+106.8%) and Japan (+81.1%) leading the way.
Interestingly, the growth in NODX to the US is a continuation of the previous month’s 22.5% rise and comes from heightened exports of non-monetary gold, food preparations (+217.2%) and disk media products (+169.6%).
Similarly, the increase in NODX to the EU 27 and Japan was an extension of a growth in trade from March and was heralded by heightened exports of pharmaceuticals by +467.7% and +864.4% respectively.
On the contrary, NODX to China (-31.3%), Hong Kong (-41.7%), Malaysia (-24.1%) Indonesia (-25.6%) and Thailand (-0.9%) staged declines, possibly due to movement control restrictions from Covid-19.
April however saw an 8.3% decline in non-oil re-exports (NORX), extending the 1.0% contraction registered by the segment in March.
This follows a 20.3% contraction in non-electronic exports, the trade agency pointed out. A further decline was mitigated by an expansion in electronic products by 6.0%.
In this time, NORX to most of the top 10 markets declined, with the top contributors being Malaysia (-32.5%), South Korea (-16.4%) and the US (-12.9%).
Overall, total trade was down 12.8% in April, further deepening the 0.2% contraction registered the previous month. Total exports were down 12.7%, from March’s 0.7% decline – recording its deepest contraction since March 2016. Meanwhile, total imports contracted 13.0% in spite of the previous month’s 0.2% growth.
Looking at April’s NODX, Selena Ling, head of treasury research and strategy at OCBC Bank muses that the increase could be attributed to the “low NODX base for most 2019” due to the trade war between the US and China.
Together with the Covid-induced demand for pharmaceuticals, non-monetary gold and food preparations, she predicts a “NODX fallout from the circuit breaker” could be limited.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Yu agree, saying “the encouraging export data for March and April suggests that manufacturing may escape [a] recession”.
“The circuit breaker measures may be sparing manufacturing and exports from the full brunt of the lockdown, as they are largely regarded essential services. The Covid-19 crisis will be defined as being more of a services recession,” they add.
As such, Ling says “the global re-opening of economies post-lockdown and the risk of subsequent infection waves will determine the NODX momentum going into the second half of 2020”.
However, UOB economist Barnabas Gan cautions that “any exacerbation in the Covid-19 pandemic will prove to be more detrimental than beneficial to Singapore’s export environment”.
