Singapore may miss 2024 key exports forecast as October disappoints with 4.6% drop

SINGAPORE - Singapore will likely miss its exports forecast for 2024 after its performance turned negative in October and was worse than expected, economists said.

Non-oil domestic exports (Nodx) fell 4.6 per cent from a year ago, according to figures released by Enterprise Singapore (EnterpriseSG) on Nov 18.

Analysts polled by Bloomberg had expected a 4 per cent rise in Nodx.

The trade agency also revised sharply downwards September’s year-on-year Nodx growth to 0.9 per cent from an earlier estimate of 2.7 per cent.

EnterpriseSG pointed to its earlier August review of Singapore’s first-half-year trade performance that said Nodx for 2024 could come in below its 4 per cent to 5 per cent forecast range.

DBS Bank economist Chua Han Teng noted that the year-on-year Nodx figure for the first 10 months of 2024 is now a 0.9 per cent drop, after accounting for October’s disappointment and the September downward revision.

“These suggest downside risks to Enterprise Singapore’s full-year 2024 forecast range, even if external demand remains resilient in the final months of 2024,” he said.

OCBC Bank chief economist Selena Ling added that if Nodx in November and December grows only 6.2 per cent year on year, then full-year 2024 growth would be a tepid 1 per cent.

“To reach 2 per cent year-on-year growth for the whole of 2024, the remaining two months of Nodx would need to average 12 per cent,” she said. 

Looking ahead, global trade and growth prospects in 2025 remain vulnerable to many uncertainties, especially those in the US, she added.

These include US President-elect Donald Trump’s trade agendas, which are likely to be more protectionist, the timing of his possible tariffs, the potential for retaliation, and indications that the US Federal Reserve will dial back on interest rate cuts, she said.

Ongoing geopolitical tensions in other parts of the world also pose downside risks, Ms Ling added.

October’s export data showed that on a month-on-month seasonally adjusted basis – which better captures trade momentum – Nodx declined 7.4 per cent, extending the 0.6 per cent drop in September.

Electronics exports increased 2.6 per cent year on year in October, reversing from a 0.7 per cent decline in the previous month.

Integrated circuits (ICs), also known as chips or semiconductors, which make up about 12 per cent of total Nodx, expanded 16.6 per cent.

Exports of disk media products jumped 96.4 per cent, while that of other computer peripherals soared 236.1 per cent. 

Conversely, non-electronics shipments shrank 6.7 per cent year on year in October, after a 1.4 per cent increase in the previous month. Specialised machinery declined by 22.6 per cent, pharmaceuticals dropped by 40.4 per cent, and petrochemicals fell by 7.4 per cent.

Exports to Singapore’s top markets shrank as a whole in October from a year earlier.

There was a 22.3 per cent fall in shipments to China, which was led by a 50 per cent drop in specialised machinery, a 25 per cent fall in ICs and 24.2 per cent drop in measuring instruments. China is Singapore’s single-largest export destination year to date.

Japan also saw a drop in Nodx of 23 per cent, the euro zone a 21.4 per cent decrease, and Hong Kong a 19.8 per cent decline.

However, exports to Taiwan grew 20.4 per cent year on year, with smaller expansions for Malaysia, the United States, South Korea and Thailand.

Ms Sheana Yue, an economist with Oxford Economics, said October’s Nodx decline was due to the volatile pharmaceutical sector, while electronics was the main bright spot.

“Our analysis suggests shifts in electronics trade flows appear to be benefiting Singapore,” she said, adding that third-quarter economic and manufacturing data suggests there is still scope for further gains.

But she added: “More broadly, we remain cautious on the export outlook, given few tailwinds driving global demand outside of electronics.

“Admittedly, Trump’s re-election might provide some upside to goods exports demand from stronger US consumer demand and front-loading of export orders in politically sensitive sectors such as electronics. But demand from other advanced economies will probably remain sluggish, and the electronics cycle is set to come off the boil soon.” 

OCBC’s Ms Ling added that the volatile nature of pharmaceutical exports is likely to persist and weigh on the strength of the Nodx trajectory till the end of 2024.

Weakness in other non-electronics exports like specialised machinery could also reflect companies cutting back on capital expenditure and a cautious business outlook into 2025, or the anticipation of a more challenging global trade environment after the US election that was held in early November, she said.

Looking ahead, OCBC expects Nodx to grow by 3 per cent to 5 per cent in 2025.

“(This is) given the likely low base in 2024, but also assuming heightened uncertainties pertaining to Trump’s tariffs threats against China and the rest of the world,” Ms Ling said.