Non-oil exports down 4.5% in May after 3 months of growth

Non-oil domestic exports (Nodx) fell last month - the first contraction after three months of expansion.

Nodx decreased by 4.5 per cent compared with the same month last year - confounding experts who had tipped a 1 per cent increase. It was also a stark reversal from the 9.7 per cent year-on-year increase in April.

Economists noted that the road ahead could remain uncertain depending on the coronavirus pandemic and the growing tensions between China and the United States.

Last month's bright spot was in the electronics sector, which lifted exports by 12.5 per cent, reversing a 0.6 per cent decline in April, Enterprise Singapore data showed yesterday.

This was largely due to integrated circuits, disk media products and disk drives, which all posted double-digit growth.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye noted: "Electronics exports are benefiting from work-from-home policies as companies depended more on technology to overcome lockdowns.

"Singapore's strong electronics performance is consistent with other tech powerhouses such as South Korea and Taiwan."

Barclays economist Brian Tan added: "The outperformance continues to suggest that exemptions under the Government's circuit breaker measures helped limit the damage to electronics manufacturing activities."

But non-electronics exports dropped by 8.8 per cent last month, after a 12.8 per cent expansion in April.

Petrochemicals fell by 31.2 per cent, followed by food preparations, which dropped 24.5 per cent. Non-electric engines and motors exports plunged 55 per cent.

Total trade shrank by 25 per cent last month, deepening the 12.9 per cent fall in April. Total exports also dropped, falling 23.9 per cent, while total imports declined by 26.2 per cent.

Exports to Singapore's top markets as a whole grew, although shipments to the European Union, Indonesia, China, Malaysia, Hong Kong and Thailand declined.

The largest contributors to Nodx growth were the US, Japan and Taiwan.

The road ahead remains murky, economists said.

Ms Selena Ling, OCBC Bank's head of treasury research and strategy, noted: "The re-emergence of the Covid-19 cases in Beijing and other spots is troubling and may imply that the recovery trajectory in the second half of the year may not be linear as consumer confidence and demand may remain subdued.

"Pharmaceuticals exports should still be well demanded, especially with second-wave concerns and recent news of vaccine developments. June's Nodx could snap back again with the reopening of the Singapore economy and other lockdowns being lifted globally."

United Overseas Bank economist Barnabas Gan added: "At this juncture, the Covid-19 pandemic and renewed US-China tensions will continue to cloud Singapore's trade prospects, while the uptick in the production and exports of pharmaceutical products may remain inadequate to support Singapore's overall export environment."

But Dr Chua and Ms Lee said there are green shoots of recovery this month, as reflected in South Korea's exports for the first 10 days of this month, which jumped by 20 per cent on the back of chip sales.

"The export downturn in this pandemic recession may be shallower as compared with past recessions."