Singapore’s key exports fall 8.7% in June

SINGAPORE – A slump in Singapore’s key exports continued for the fifth consecutive month in June.

Non-oil domestic exports (Nodx) fell 8.7 per cent from a year earlier, a much steeper contraction than a revised 0.7 per cent dip in May. This drop also exceeded the 1.3 per cent decline predicted by economists in a Bloomberg survey.

The pullback was mainly due to non-electronics, primarily volatile products like non-monetary gold, while electronics also dipped due to a high base a year ago, said trade agency Enterprise Singapore on July 17.

Electronics exports declined by 9.5 per cent in June, reversing a 19.6 per cent growth in May. This contraction was largely driven by a 50.5 per cent fall in telecommunications equipment, a 25.4 per cent decrease in disk media products and an 8 per cent drop in integrated circuits, also known as chips or semiconductors.

DBS Bank economist Chua Han Teng remains upbeat about Singapore’s electronics shipments, noting that they will benefit from an ongoing global tech-cycle upturn.

“We expect global tech demand to be supported by the replacement of smartphones and PCs, as well as the broadening use of artificial intelligence (AI) applications,” he said.

He added: “We continue to expect a gradual and fragile exports recovery... Base effects should be more favourable in the third quarter of 2024, and the continued expansion in new export orders of Singapore’s headline manufacturing purchasing managers’ index for the ninth straight month in June reflects improved external demand which should benefit Singapore’s exports.”

UOB associate economist Jester Koh struck a slightly more cautious tone, suggesting that recovery prospects in the electronics segment are “possibly delayed but not derailed”.

He added: “Singapore’s electronics cycle may see a lagged upturn compared to that of South Korea and Taiwan, given that our semiconductor ecosystem is almost entirely built around mature nodes and may not benefit directly from AI-related demand, but indirectly via its positive spillovers into consumer electronics such as PCs and smartphones.”

In June, non-monetary gold exports fell 51.1 per cent, weighing on non-electronics shipments which shrank 8.5 per cent, following a 6.1 per cent decline in May.

The contraction in non-electronics Nodx was also driven by specialised machinery, which fell 10.3 per cent.

Shipments to Singapore’s top 10 markets as a whole worsened in June.

Notably, shipments to the United States fell 21.3 per cent, reversing a 12.1 per cent growth in May. Shipments to China declined 11.2 per cent, following a 22.2 per cent contraction in May.

The Republic’s exports to the European Union were a bright spot, growing 6.2 per cent, while shipments to Malaysia, Thailand and Indonesia also increased.

Maybank economist Chua Hak Bin noted that port congestion from the Red Sea crisis may be dampening Singapore’s export recovery.

He said: “The congestion could lead to a wedge and divergence between industrial production and exports.

“The disruption may persist for a few months but could also indicate pent-up demand, which can potentially increase export volumes by late third quarter this year.”

On a month-on-month seasonally adjusted basis, which removes the effects of seasonal variations in the numbers, Nodx declined 0.4 per cent in June, after a revised 0.7 per cent contraction in May.

In value terms, June Nodx came to $13.8 billion, similar to the previous month’s number, but lower than a year-ago level of $14.4 billion and 2023’s average of $14.5 billion.

OCBC Bank chief economist Selena Ling noted that a “bumpy ride” for Nodx is still expected in the short term.

“It looks difficult to achieve the official 2024 Nodx forecast of 4 to 6 per cent unless a very strong rebound occurs in the second half of the year,” she said.

EnterpriseSG said in May that Singapore expects growth in key exports to come in at the lower end of a range of 4 per cent to 6 per cent forecast in 2024.

The assessment followed a disappointing start to the year, when Nodx fell 3.4 per cent to around $42 billion in the first quarter.