March non-oil exports beat expectations with 12.1% jump

Singapore's non-oil domestic exports (Nodx) jumped sharply last month, prompting analysts to raise their exports forecast for the year amid a nascent global recovery.

Nodx surged 12.1 per cent year on year in March, mainly due to higher demand for non-electronics such as petrochemicals and increased electronics shipments from a low base, according to data released by Enterprise Singapore (ESG) yesterday. This is higher than the 4.2 per cent rise in February, beating analysts' forecasts of 2.6 per cent growth.

Analysts said the positive trend in key exports could continue for the rest of the year, boosted by resilient electronics demand and recovery in the global economy, with Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye suggesting that the official Nodx forecast of 0 per cent to 2 per cent growth for the year could be raised at the review next month.

Last month, electronics shipments expanded 24.4 per cent year on year, compared with the 7.3 per cent growth seen in February. This was from a low base a year ago, but also came on the back of strong demand for the likes of integrated circuits (ICs) amid strong global semiconductor demand and media reports of chip shortages, said ESG.

OCBC Bank's head of treasury research and strategy Selena Ling noted that there was double-digit growth recorded in PCs, diodes and transistors, and IC shipments.

"This is a clear indication that Singapore's semiconductor industry is benefiting from the ongoing global chip shortage," she said.

Meanwhile, non-electronics Nodx grew 9.4 per cent last month, compared with the 3.2 per cent year-on-year increase in February. In particular, petrochemical exports leapt 51.4 per cent, while specialised machinery expanded 35.1 per cent.

"Firming global economic activities and robust chip demand may keep Singapore's exports humming in 2021," said Maybank Kim Eng's Dr Chua and Ms Lee, who lifted their full-year Nodx forecast to around 5 per cent to 6 per cent growth, up from a 3 per cent to 4 per cent increase.

They added that supply and logistics bottlenecks such as port congestion and the Suez Canal blockage have not dampened exports.

Ms Ling said that, assuming the global vaccine-aided recovery theme continues to bloom into the second half of the year, Singapore's Nodx could grow 2 per cent to 4 per cent this year, up from OCBC's existing forecast of a 2 per cent increase.

Exports to the top 10 markets as a whole grew last month, while shipments to emerging markets rose 67.9 per cent.

UOB economist Barnabas Gan said March's encouraging expansion in Nodx suggests a strong rebound in global trade demand, and the bank has upgraded its forecast for full-year Nodx growth to 5 per cent, up from 1 per cent.

He added: "The improving global economic backdrop, uptick in semiconductor demand and rising oil prices are strong drivers to lift Singapore's export momentum in 2021."

Year on year, total trade expanded 19.6 per cent last month, reversing the 3.3 per cent decline seen in February.

Oil shipments grew 14.7 per cent year on year in March, reversing the 28 per cent contraction the previous month.

On a seasonally adjusted basis, total trade reached $98.4 billion last month, higher than the $91.8 billion in February.