2022 forecasts for overall merchandise trade, Nodx kept unchanged

Singapore left unchanged its 2022 forecasts for key trade indicators despite exports beating expectations last year, with the global outlook dampened by the spread of the Omicron Covid-19 variant.

Overall merchandise trade and non-oil domestic exports (Nodx) are expected to grow by 0 per cent to 2 per cent this year, Enterprise Singapore (ESG) said yesterday.

This comes even as both indicators topped official forecasts last year amid higher oil prices and non-electronic shipments.

Analysts said the momentum is likely to continue this year, although uncertainties remain.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye expect electronics and non-electronics to continue rising at slower but healthy rates this year, on the back of sustained demand for chips and related equipment and petrochemicals, as well as higher export prices.

"We maintain our 2022 Nodx growth forecast at 4 per cent to 6 per cent, higher than ESG's expectation of 0 to 2 per cent," they said.

UOB economist Barnabas Gan said Singapore, with its high vaccination rates, is well positioned to ride the endemic Covid-19 recovery this year. "For the year ahead, Singapore will have to contend with new waves of infections and a high growth base in the previous year," he said.

UOB expects Nodx to expand by 2 per cent this year, with "upside risks".

Nodx rose 12.1 per cent last year, beating the official forecast of a 9.5 per cent to 10 per cent increase.

It was boosted mainly by non-electronic shipments such as specialised machinery and petrochemicals. Both electronic and non-electronic shipments grew for the second straight year.

Total merchandise trade grew by a better-than-expected 19.7 per cent last year, reversing the 5.2 per cent drop in 2020, as both oil and non-oil shipments increased. It beat ESG's forecast of 17 per cent to 17.5 per cent.

Non-oil trade rose by 15.9 per cent last year, while oil trade expanded by 43.6 per cent amid higher oil prices.

But 2022 growth forecasts for most of Singapore's key trade partners, including China, the US, the euro zone and Asean, have been downgraded as the spread of Omicron prompted economies to reimpose mobility restrictions.

Global supply bottlenecks are expected to persist before abating in the later part of the year, ESG noted.

For the fourth quarter alone, Singapore's Nodx surged 20.1 per cent year on year, accelerating from the previous quarter's 9 per cent rise.

Total merchandise trade in the fourth quarter grew 28.8 per cent, following the 19 per cent increase in the previous quarter.

Singapore's total merchandise trade reached $1.2 trillion last year, compared with $969 billion in 2020. It also surpassed the $1 trillion seen in 2019 before the Covid-19 pandemic broke out.

Total trade continued to grow last month by 25 per cent year on year, slowing from the 31.4 per cent expansion in the previous month.

Nodx rose by 17.6 per cent last month, mainly boosted by non-electronics, moderating from the 18.4 per cent growth in December.

The United States, China and the 27 EU countries contributed to most of the increase.

Nodx to emerging markets also grew, mostly due to South Asia, the Middle East and Latin America.

Non-electronic shipments expanded by 18.6 per cent, buoyed by structures of ships and boats, specialised machinery and petrochemicals.

Electronic exports increased by 14 per cent amid more shipments of integrated circuits, PCs and disk media products.

Dr Chua and Ms Lee said that Nodx started the year on a firm note despite concerns over supply chain disruptions, but the figures were flattered by price effects.

"Real Nodx growth at 2018 prices eased to 3.9 per cent in January, compared with 4.5 in December, suggesting potential capacity limits and supply disruptions," they said.

Mr Gan said that overall, demand for Singapore's electronic and non-electronic products continued last month, suggesting that the export environment remains buoyant despite Covid-19-related risks.