Singapore exports grow at faster 7.7% pace in August; bumpy recovery ahead

Non-oil domestic exports have now increased in six out of the seven months of this year, compared to only one month of gain in 2019. ST PHOTO: SHINTARO TAY

SINGAPORE - Growth in Singapore's non-oil domestic exports (Nodx) picked up last month, with shipments increasing 7.7 per cent year on year, mainly driven by non-electronic goods, according to data from Enterprise Singapore (ESG) on Thursday (Sept 17).

August's increase was more than double the 3.3 per cent expansion forecast by private analysts in a Bloomberg survey.

Nodx has now risen in six out of the eight months of this year, a robust performance when compared with only one month of gain last year. Nodx growth also picked up pace on a three-month moving average year-on-year basis, rising 9 per cent after a 4.6 per cent gain in July.

The gain in July's Nodx was revised down to 5.9 per cent, from 6 per cent. Shipments were up 13.9 per cent in June after a 4.6 per cent drop in May.

Month on month and seasonally adjusted, Nodx in August rose 15.6 per cent, higher than the 14.1 per cent gain in July.

The Government last month raised Singapore's 2020 trade forecasts, predicting Nodx to grow by 3 per cent to 5 per cent year on year, compared with an earlier forecast for a 1 per cent to 4 per cent fall.

Ms Lee Ju Ye, analyst at Maybank Kim Eng Securities, said Singapore's Nodx has risen by 5.9 per cent in the year to date, in contrast to the plunge seen during the global financial crisis of 11 per cent in 2009. Nodx dropped 14 per cent in 2001 in the wake of the recession caused by the bust.

"While the Covid-19 pandemic has resulted in significant disruption to people flows due to lockdowns and border controls, the impact on manufacturing supply chains and trade flows has been much less severe," she said.

Ms Lee said that with global and regional manufacturing gauges having normalised to pre-pandemic levels in August, the resilience in exports bodes well for Singapore, given its role as a regional trading and transport hub.

"We are, however, mindful of the downside risks, including a resurgence of Covid-19 infections in parts of Europe, and intensifying US-China tensions that could disrupt global supply chains," she noted.

ESG data showed shipments of non-monetary gold, specialised machinery and food preparations led August's gains, followed by electronic exports.

Non-electronic Nodx rose by 8.3 per cent in August, following the 6.9 per cent growth in the previous month. Non-monetary gold (+55.1 per cent), specialised machinery (+25.7 per cent) and food preparations (+18.9 per cent) contributed the most to the growth in non-electronic Nodx.

Domestic exports of non-monetary gold have gained momentum this year amid hoarding of physical gold as a safe-haven asset in view of the global economic uncertainty induced by the coronavirus pandemic.

ESG said specialised machinery and food preparations grew mainly from a low base in August 2019 when exports of both were up just 0.2 per cent.

Electronic shipments were up 5.7 per cent, following the 2.8 per cent increase in July. Integrated circuits or chips, disk media products and personal computers grew by 7.1 per cent, 11.8 per cent and 15.2 per cent respectively, contributing the most to the growth in electronic Nodx.

According to ESG, domestic chip exports accounted for 64 per cent of electronic Nodx growth in August, after declining by 32.1 per cent in August 2019 amid the global electronics downcycle.

Ms Sung Eun Jung, a Singapore-based economist economist at Oxford Economics, said while resilience in Nodx throughout the pandemic has been noteworthy, re-exports have been much weaker and more uneven.

ESG data showed non-oil re-exports (NORX) rose by 0.1 per cent year on year in August, after the 3.1 per cent decline in July.

"The prospects for a continued recovery in re-exports are much more uncertain as countries around the world still grapple with Covid-19," Ms Jung said.

Nodx to Singapore's top markets as a whole grew in August, though exports to Indonesia, Hong Kong, Malaysia and Thailand declined. The largest contributors to the Nodx growth were China (+24.5 per cent), the EU 27 (+30.2 per cent) and the United States (+14.1 per cent).

Total trade decreased 6.9 per cent year on year in August, following the 9 per cent decline in July. Total exports decreased by 4.7 per cent, after July's 8.1 per cent decline. Total imports fell 9.4 per cent, following the 10 per cent slide in the previous month.

Total trade has taken a hit from the slump in oil trade, which plunged 42 per cent amid lower oil prices from a year ago, following the contraction of 49 per cent in July.

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