Export growth hits 7-year high but outlook more muted

Nodx grew 9.2% in 2017, but Dec figures miss estimates as electronics shipments slow

Non-oil domestic exports (Nodx) went up 3.1 per cent last month, undershooting economists' estimates of an 8.6 per cent rise.
Non-oil domestic exports (Nodx) went up 3.1 per cent last month, undershooting economists' estimates of an 8.6 per cent rise. ST PHOTO: JAMIE KOH

A global electronics boom propelled Singapore's export growth to a seven-year high last year - but an underwhelming showing last month hinted that this pace will be tough to sustain.

While trade demand is set to remain robust, exports are expected to grow at a more sedate pace this year, economists said.

December trade data out yesterday pointed to more modest growth ahead. Non-oil domestic exports (Nodx) went up 3.1 per cent last month, undershooting economists' estimates of an 8.6 per cent rise and much slower than the preceding month's 9.1 per cent climb.

This came as electronics exports - a key growth driver for the economy over the past year - declined 5.3 per cent compared with the same month a year earlier, data from IE Singapore showed.

Non-electronics shipments made up the shortfall, rising 6.8 per cent.

Last month's slide in electronics Nodx was due in part to a high base in December 2016 - when the explosion in semiconductor manufacturing first started fuelling a trade-driven turnaround in Singapore's economic fortunes.

"December is usually a quieter month, but December 2016 was abnormal because it coincided with the start of the electronics cycle," said CIMB Private Bank economist Song Seng Wun. "This December is a more typical year end."

Mr Song said electronics manufacturing is expected to continue growing at a robust pace this year.

"The momentum will be maintained, but we are not going to see strong double-digit year-on-year growth numbers like we did in 2017, partly because of the high base," he added.

The strong Singapore dollar also played a part in weighing down December trade numbers, said DBS senior economist Irvin Seah.

The Singdollar appreciated about 6.2 per cent against the greenback in December last year compared with December 2016.

International trade is usually carried out in US dollars, but Singapore reports its trade data in Singdollars, Mr Seah noted.

"If you take that into consi-deration, Nodx expanded by 10 per cent in December in US dollar terms.

"This means the outlook on the export front is not as bad as what the numbers suggest," he added.

For the whole of 2017, Nodx grew about 9.2 per cent, taking into account the latest December data.

This was the strongest pace of expansion since 2010, and also blew past official forecasts - trade agency IE Singapore had tipped Nodx to rise 6.5 per cent to 7 per cent for the full year.

The global economy is expected to remain robust this year, brightening Singapore's trade outlook.

"(Manufacturing) numbers in key markets remain resilient, and we expect this to continue for the rest of the year," said Mr Seah.

"We expect more volatility in exports in the coming months due to the upcoming Chinese New Year, but overall outlook for Nodx remains positive."

Still, OCBC economist Selena Ling pointed out that shipments to half of Singapore's top 10 Nodx markets - including China - shrank last month.

"This bears watching to see if the December slump to China is a seasonal blip, since China is the hub of the global supply chain and an important market for final demand in the region as well," she said.

A version of this article appeared in the print edition of The Straits Times on January 18, 2018, with the headline 'Export growth hits 7-year high but outlook more muted'. Print Edition | Subscribe