Exporters ended 2016 on a surprisingly upbeat note as shipments from Singapore registered another month of robust growth, surprising economists who had expected a more modest uptick.
December's unexpectedly strong non-oil domestic exports (Nodx) figures may be a sign that the region is finally recovering from its long trade slump. But economists cautioned against popping the champagne too early, especially in view of possible risks from United States President-elect Donald Trump's anti-trade stance.
Singapore's Nodx expanded 9.4 per cent in December over the same month a year earlier. This was significantly higher than economists' expectations of 5.8 per cent growth, and followed a strong 11.5 per cent reading in November.
Singapore's trade numbers have been lacklustre in recent years on the back of tepid global growth and structural changes in the manufacturing sector.
Nodx contracted 3.2 per cent for the whole of 2016, marking the fourth straight year of decline.
The latest numbers could suggest that exports have finally turned the corner, economists said.
December's rise was driven by increases in both electronics and non-electronics shipments.
Integrated circuits, PC parts and consumer electronics contributed the most to the growth in electronics domestic exports, while specialised machinery, petrochemicals and primary chemicals helped to lift non-electronics shipments.
Electronics manufacturing in particular seems to be staging a slow but steady recovery and prospects in the segment look brighter.
"We anticipate that global demand for Oled (organic light emitting diode) displays, dual-lens cameras, fingerprint technology and touchscreens could remain key industry drivers in 2017 and sustain the manufacturing momentum for the first half of 2017," said OCBC economist Selena Ling, who expects Nodx growth of zero to 2 per cent this year.
Growth in non-oil domestic exports in December 2016, over the same month a year earlier.
Growth in electronics exports in December, following the 3.5% increase in the previous month.
Rise in non-electronics exports, following the 15.3% expansion in November.
ANZ economist Ng Weiwen said December's strong Nodx numbers "corroborate recent trade data which showed a notable rebound in exports in most Asian countries".
"This suggests the tentative end of the trade recession which has plagued the region since late 2014."
However, significant risks remain and this tentative pick-up could still be derailed, Mr Ng said.
"The risk of US-Sino trade tensions has increased. Any loss of momentum in China's trade will have repercussions across the rest of Asia," he said. "Furthermore, if President Trump does manage to undertake a sharply protectionist trade policy stance, levy extra taxes on US importers and label major trade partners as currency manipulators , this may well attract retaliatory measures from trading partners and exacerbate trade tensions."
Such developments would hit Singapore's small and trade-dependent economy, he added.