Singapore’s non-oil domestic exports (NODX) for June fell by 15.5% y-o-y, making this the ninth straight month of contractions.
During the month, electronic and non-electronic exports declined. Electronic NODX fell by 15.9% on a y-o-y basis led by the declines of integrated circuits (ICs), personal computers (PCs) and parts of PCs which fell by 31.8%, 44.2% and 44.8% respectively.
Non-electronic NODX fell by 15.4% y-o-y with petrochemicals, pharmaceuticals and primary chemicals contributing the most to the decline at 34.0%, 29.5% and 61.8% respectively.
NODX to the top markets fell on the whole, although NODX to Hong Kong and China rose. The top contributors to the decline in NODX were Malaysia (-30.7%), Indonesia (-35.7%) and South Korea (-24.2%).
NODX to Malaysia fell due to the drop in ICs (-50.2%), articles of plastic (-79.1%) and specialised machinery (-33.7%). Meanwhile, NODX to Indonesia fell due to the decline in petrochemicals (-31.6%), plastic plates & sheets (-95.8%) and primary chemicals (-55.4%). Finally, NODX to South Korea fell primarily due to ICs (-84.6%), measuring instruments (-55.1%) and PCs (-54.7%).
On a m-o-m seasonally adjusted basis, NODX grew by 5.4% in June to $14.5 billion as electronic and non-electronic NODX increased.
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NORX
Non-oil re-exports for June fell by 15.5% on a y-o-y basis as electronics and non-electronics declined. Electronic NORX fell by 17.1% y-o-y due to ICs (-18.4%), diodes & transistors (-27.7%) and parts of PCs (-20.7%). Non-electronic NORX fell by 9.6% y-o-y due to specialised machinery (-41.3%), non-monetary gold (-42.8%) and electrical machinery (-34.7%).
NORX to the top markets fell in June led by Hong Kong (-29.8%), Malaysia (-28.2%) and the EU 27 (-25.2%).
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On a m-o-m seasonally adjusted basis, NORX rose by 3.6% to $28.4 billion in June. This time, electronics grew while non-electronics declined.
Oil domestic exports
Oil domestic exports fell by 30.9% y-o-y in June mainly due to lower exports to Malaysia (-41.7%), Australia (-53.7%) and Indonesia (-26.9%). In volume terms, oil domestic exports grew by 13.0% in June. On a m-o-m seasonally adjusted basis, oil domestic exports fell by 1.3% in June.
Total trade
In June, total trade contracted by 19.2% as total exports and total imports contracted. Total exports fell by 17.2% while total imports contracted by 21.4%. On a m-o-m basis, total imports grew by 3.4% to reach $97.7 billion.
Economists say...
With nine straight months of NODX contractions, UOB’s senior economist Alvin Liew notes that the latest report still reflects the persistent downturn in NODX.
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“Together with the broad-based weakness in both electronics and non-electronics performance, [this] continued to weigh negatively on manufacturing demand for Singapore,” he writes.
He adds that the more negative prints on NODX declines to several major export destinations also confirmed UOB’s cautious outlook. As such he has maintained his call to “expect sustained weakness in global demand amidst an on-going electronics downcycle”.
Furthermore, the gloom to the demand outlook for the developed markets was exacerbated by NODX to the US turning negative in June.
However, Liew welcomes the rebound in NODX to Hong Kong as well as the second month of positive NODX growth to China even though he remains “uncertain” if the momentum can be sustained.
“Overall, the export outlook remains troubled, and we continue to expect more pronounced y-o-y NODX contractions for a few more months before improving in the later part of 2H2023,” says Liew.
“Just like in our previous report, we still expect NODX to contract by 10% in 2023, at the lower end of the government’s NODX forecast range of ‘-10.0% to -8.0%’,” he adds.
Singapore’s NODX in June performed better than OCBC’s chief economist & head of treasury research & strategy, Selena Ling’s forecast of a -17.8% y-o-y reading.
That said, the analyst notes that this is still the second double-digit drop on a y-o-y basis. June’s numbers also mark the poorest pace since February 2023.
In June, only China and Hong Kong showed expansions out of Singapore’s top 10 markets. However, Ling warns against being too positive on the Chinese market for the time being.
“Given China’s economic indicators have shown waning growth momentum in recent months, which coupled with very targeted and calibrated policy stimulus, had contributed to weak market sentiments, a note of caution may be necessary as to assessing whether the NODX recovery for the Chinese market is sustainable,” she says.
For the FY2023, the analyst estimates that Singapore’s NODX is likely to contract by up to 10% y-o-y.
“For the first six months of 2023, NODX has already slumped -14.8% y-o-y which marked the weakest first-half performance since 1H2009 (-20.3% y-o-y). Even if there is a moderation in the pace of contraction in 2H2023, the external growth environment remains soft and the demand conditions for our key NODX markets are still facing headwinds including hawkish major central banks such as the Federal Open Market Committee (FOMC) and European Central Bank (ECB) in the short term,” she says.
“This reinforces our house view that while the Singapore economy may have escaped a technical recession in the advance 2Q2023 GDP growth estimates, the 3Q2023 growth prognosis may stay hampered by the ongoing protracted soft patch in manufacturing, especially electronics even though there should be some improvement in the services, especially hospitality-related industries,” she adds.
RHB Bank Singapore's senior economist Barnabas Gan has kept his full-year NODX growth forecast at -8.0%. In his note on July 17, Gan expects Singapore's NODX to contract further into the 3Q2023 while recovering only in the 4Q2023.
"NODX momentum, however, has continued to recover in recent months, suggesting that the decline in trade activities could have effectively troughed. Still, y-o-y growth has continued to print in the negative zone on the back of the relatively high-base prints over the same period last year. The deceleration in export contraction on a y-o-y perspective is also seen across key export-oriented Asean economies – Malaysia (June: -0.7% y-o-y, May: -17.6% y-o-y) and Thailand (June: -4.6% y-o-y, May: -7.6% y-o-y)," he writes.
"We expect NODX’s recovery momentum to sustain into 2H2023. The improving momentum seen in recent months is in line with our global assumptions. 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 suggests that Singapore’s GDP growth will accelerate in 3Q2023, following improving business expectations, stock market valuations, and manufacturing purchasing managers’ index (PMI)," he adds.
That said, this month's negative NODX suggests that Singapore's GDP numbers for the 2Q2023 face downside risks compared to the advanced estimates released on July 14.
"We believe that Singapore’s advance GDP estimates may be revised lower on account of declining y-o-y prints in high-frequency numbers. From a bottoms-up perspective, whilst accounting for the growth prints in Singapore’s key economic sectors released last week, Singapore’s 2Q2023 GDP should have been softer against the +0.7% y-o-y (+0.3% q-o-q seasonally adjusted) expansion. Similarly, given June’s NODX data release, real NODX (2018) contracted 6.7% y-o-y in 2Q2023, against -11.6% y-o-y in 1Q2023, thus suggesting that the downturn is still on the cards," says Gan.
