Singapore’s non-oil domestic exports (NODX) expanded by 9.0% y-o-y in June, extending from the 12.4% y-o-y growth in May.
The expansion was mainly attributable to the increase in non-electronic exports such as food preparations, petrochemicals and measuring instruments, although electronics exports also grew during the month.
Electronic NODX rose by 4.1% in June after the 12.9% growth in May thanks to integrated circuits (ICs), parts of ICs and disk drives, which contributed most to the growth.
ICs, parts of ICs and disk drives rose by 26.0%, 86.1% and 18.0% respectively on a y-o-y basis.
Non-electronic NODX rose by 10.6% in June, extending the 11.7% rise in May. The growth was contributed most by food preparations, petrochemicals and measuring instruments at 48.0%, 21.1% and 30.9% respectively. The expansions for food preparations and petrochemicals stem from a low base a year ago.
On a m-o-m seasonally adjusted basis, NODX increased by 3.7% to $17.7 billion, with growth in both electronics and non-electronics during the period.
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In June, NODX to the top 10 markets rose as a whole, with the largest contributors being the US, Malaysia and Indonesia at 21.5%, 43.0% and 21.6% respectively. Of the top 10 markets, six showed expansions, while four showed declines.
NODX to the US expanded after the 9.6% decline in May. This month, food preparations (+92.7%), specialised machinery (+25.3%) and telecommunications equipment (+67.5%) were the biggest contributors to the NODX to the country.
NODX to Malaysia increased due to ICs, non-monetary gold and specialised machinery at expansions of 160.9%, 103.2% and 43.6% respectively on a y-o-y basis.
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NODX to Indonesia grew by 21.6% in June thanks to plastic plates & sheet, non-monetary gold (with a 435.3% y-o-y growth) and iron/steel scrap (which saw an 180.4% y-o-y growth).
NODX to the EU 27, Hong Kong, South Korea and Thailand declined in June.
NODX to emerging markets expanded by 30.3%, easing from the 61.9% expansion seen in May. This month, the growth in NODX markets was mainly due to the 208.9% expansion in Latin America. South Asia and CLMV also contributed to the expansion with y-o-y growths of 48.5% and 15.6% respectively.
CLMV refers to Cambodia, Laos, Myanmar and Vietnam.
NORX growth
In June, non-oil re-exports (NORX) grew by 31.4% y-o-y, extending the 19.2% growth seen in May. This was thanks to expansions in both electronics and non-electronics.
On a y-o-y basis, electronic NORX expanded by 34.5% due to ICs, diodes & transistors and telecommunications equipment registering expansions of 37.1%, 84.5% and 27.0% respectively.
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Non-electronic NORX expanded by 27.8% y-o-y due to non-monetary gold, specialised machinery and non-electric engines & motors at 205.6%, 116.1% and 42.3% respectively.
On a m-o-m seasonally adjusted basis, NORX grew by 3.7% in June to $33.9 billion. Electronic NORX grew, while non-electronic NORX declined.
NORX to the top 10 markets as a whole rose in June, with the top three contributors being Malaysia, Hong Kong and the US.
Malaysia contributed 70.5% to the growth while Hong Kong and the US contributed 20.3% and 38.8% respectively.
Oil domestic exports
Oil domestic exports grew by 66.2% in June on a y-o-y basis, easing from the 86.4% y-o-y expansion in May.
This was thanks to higher exports to Malaysia (+165.7%), Australia (+60.9%) and Panama (+97.3%).
In volume terms, oil domestic exports declined by 9.9% in June, following the 1.7% decrease in the previous month.
On a m-o-m seasonally adjusted basis, oil domestic exports declined by 3.0% in June, after the 8.4% growth in May.
Total trade
Total trade grew by 31.0% in June, following the 32.1% expansion in May.
During the month, total exports expanded by 29.5% and total imports grew by 32.5%.
On a m-o-m seasonally adjusted basis, total trade rose by 1.3% to $123.5 billion.
What the economists say...
As June’s NODX stood “well-ahead” of Bloomberg’s median estimate of a 6.1% y-o-y gain, UOB’s senior economist Alvin Liew is keeping his full-year NODX growth forecast unchanged at 5% for 2022.
The forecast is at the top end of ESG’s projection range of 3% - 5%.
“The forecast takes into consideration the external risks of elevated commodity prices, tighter global interest rate policies and concerns of a potential US recession as well as the risks of easing electronics NODX momentum and, the troublingly weak European demand and renewed downside growth concerns in China,” says Liew.
“Even as we factor a slowdown in NODX growth in 2H (assuming a monthly average increase of around 2% y-o-y for the next six months in 2022), coupled with year-to-date gain of 10.2%, the full year projection still looks achievable,” he adds.
Of note to Liew, is the marked easing of electronics NODX growth, which grew 4.1% y-o-y in June, down from the 12.9% y-o-y growth in May. June’s growth marks the first single-digit print since February 2021.
The headline growth was due to the significant declines in PCs, which stood -45.2% y-o-y and disk media products, which fell 10.8% y-o-y.
In non-electronics NODX, pharmaceuticals logged its third straight month of y-o-y contractions with a 20.7% y-o-y decline in June. With a value of $1.39 billion as at June, the figure is the “lowest value level” recorded in 2022 to date.
In terms of Singapore’s NODX to the top 10 markets, Liew notes that the biggest concern was regarding the demand from the EU27, which saw the second straight y-o-y decline in June, at -16.4% y-o-y (from -6.6% in May).
The NODX value in June at $1.46 billion was also the lowest monthly level recorded in 2022 to date.
Noting that June’s NODX marks the republic’s expansions for the 19th straight month, Liew adds that the period now outruns the 17-month stretch in the November 2009 – March 2011 period when the world recovered from the global financial crisis.
To Selena Ling, OCBC’s chief economist and head of treasury research and strategy, global growth prospects have “darkened significantly” in recent weeks.
“Forecast downgrades [are] becoming more common by the day and the latest is the IMF indicating that they will cut their global growth forecast substantially,” she writes.
“Recession fears have replaced inflation as the predominant theme, especially for the US, Eurozone and UK, whilst a sharper than expected slowdown in China remains an evergreen worry given the property markets remains its Archilles heel and domestic consumer sentiments remain soft,” she adds.
In contrast, the growth prospects within the region remain “fairly resilient” due to the recent re-opening of borders and the pick-up in tourism-related industries and domestic consumption.
“Nevertheless, given the US Federal Reserve’s frontloading of aggressive interest rate hikes and the broad USD strength, it also bears watching if there will be any capital outflows from the region due to narrowing interest rate differentials,” says Ling.
To this end, the economist sees NODX growth as likely to expand by 6% - 8% in 2022, although “the risk of policy mistakes by major central banks driving global growth prospects south and heightened financial market volatility” is one key external headwind to watch for ahead.
