Singapore’s non-oil domestic exports (NODX) expanded by 17.2% in July, making this the eighth straight month of growth.
According to official data released on Aug 17 by trade agency Enterprise Singapore (ESG), July’s NODX was mainly due to growth in non-electronics; the electronics sector also logged growth for the month.
In July, electronic products increased by 15.0% y-o-y, mainly contributed by growth in personal computers (PCs), integrated circuits (ICs) and diodes & transistors which rose by 83.2%, 11.1% and 29.7% respectively.
Non-electronic NODX grew by 12.1% y-o-y in July as specialised machinery, pharmaceuticals and petrochemicals contributed the most to the sector’s growth.
On a seasonally adjusted month-on-month basis, NODX declined by 0.9% to $16.1 billion in July.
Non-electronic NODX grew while electronic NODX fell.
Singapore’s NODX to its top 10 markets rose overall in July, with the US being the only exception.
In July, the top contributors to the rise were China (+58.5%), the EU 27 (+61.5%) and Taiwan (+37.0%).
NODX to China were boosted by specialised machinery, non-monetary gold and petrochemicals, while NODX to EU 27 were due to civil engineering parts, specialised machinery and pharmaceuticals.
NODX to Taiwan were attributable to specialised machinery, ICs and measuring instruments.
NODX to emerging markets rose by 59.5% in July, mainly due to exports to South Asia (+94.6%), Cambodia, Laos, Myanmar and Vietnam (+71.4% collectively) and Latin America (+92.2%).
See also: Singapore's May NODX climbs 8.8%, led by non-electronic exports
Oil domestic exports rose by 40.3% y-o-y in July from a low base in 2020, and contributed by higher exports to Australia (+124.9%), Indonesia (+102.8%) and China (+94.1%).
In volume terms, oil domestic exports fell by 11.6% y-o-y following the 11.7% y-o-y growth in June.
Non-oil re-exports (NORX) grew 13.9% y-o-y in July, due to growth in both electronics and non-electronics.
Electronic NORX expanded by 19.6% in July due to ICs (+31.0%), diodes and transistors (+10.2%) and PCs (+18.3%).
Non-electronic NORX grew by 7.1% thanks to watches and clocks (+98.5%), specialised machinery (+40.8%) and nickel (+972.4%).
On a seasonally adjusted m-o-m basis, NORX fell by 0.6% in July to $25.8 billion, extending from the 9.4% decline in June.
NORX to the top 10 markets grew in July, with the top three contributors being Hong Kong (+35.2%), China (+37.4%) and Taiwan (+26.1%).
NORX to the EU 27, Malaysia and Japan declined in July.
During the month, total trade rose by 19.0% y-o-y boosted by a 16.4% in total exports and a 22.0% growth in total imports.
On a seasonally adjusted m-o-m basis, total trade fell by 1.2% in July to $93.6 billion, attributable to a 1.7% decline in total exports and a 0.5% decrease in total imports.
OCBC's head of treasury research & strategy Selena Ling says the strong July export performance was similar to that of South Korea (29.6% y-o-y), Taiwan (34.7% y-o-y) and China (19.3% y-o-y). Although, Ling adds that market watchers remain concerned that the growth momentum may have peaked in China amid the stepped-up scrutiny of selected industries.
Given the continued strong streak of NODX growth, Ling is confident that her FY2021 NODX forecast of +8% will be met. The growth could sustain for the remainder of the year, given the still-low base in October to November 2020.
That said, "if growth momentum has peaked in both US and China, coupled with sporadic outbreaks of Delta cases, it is plausible that their import demand could be dampened somewhat in the near-term, albeit the US’ US$1 trillion ($1.36 trillion) infrastructure plan could be a positive factor going into 2022," she says.
UOB economist Barnabas Gan has, too, kept his FY2021 NODX outlook at 8.0% on the back of the continued recovery in global trade.
"A relatively stronger export demand from Singapore’s key trading partners also suggests that demand in the region had remained buoyant while mindful of the ongoing Covid-19 risks. As such, we continue to maintain our full-year NODX growth outlook at 8.0% for 2021," he writes.
The team at RHB Group Research sees export growth momentum to continue in the 3Q2021 amid the pick-up in global demand.
"We expect the semiconductor demand to remain resilient as global semiconductor sales continue to trend upwards. This should continue to support shipments of specialised machinery. The petrochemicals sector should remain strong following movements in oil prices. Risks from increasing infections across the global supply chain may affect exports performance," writes the team.
Finally, Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye have kept their NODX forecast at +9.0%.
This is due to exports in the 2H2021 being supported by the "resilient demand for chips and related equipment", while "non-electronics such as petrochemicals will continue to rise from last year's low base," they write. "However, downside risks to trade remain as the delta variant continues to force lockdowns in some parts of Asia, compounded by flood disasters in China and Germany. Partial shutdowns in factories across Asean may dampen exports and trade. Freight capacity remains tight in the world’s major ports and container rates continue to climb to record highs."
“As the global economy recovers from the economic effects of the pandemic and international trade rebounds, the manufacturing sector should continue its growth momentum. We remain hopeful about the trajectory of Singapore’s exports over the rest of the year, says Samuel Gan, Senior Vice President for Capital Markets at ADDX.
However, the global shortage in chips may pose a risk to Singapore's export performance in the months ahead, despite the republic being a beneficiary of the global semiconductor upswing, he adds.
Furthermore, he sees potential "pressure on global supply chains, including challenges in global shipping, as well as the spread of the Covid-19 Delta variant" that could also "negatively impact export performance in the second half of the year.”
Photo: Bloomberg
