SINGAPORE - Singapore's non-oil domestic exports (Nodx) grew at a slower pace in September, prompting analysts to warn of a still bumpy recovery path ahead.
According to data from Enterprise Singapore (ESG) on Friday (Oct 16), shipments last month rose 5.9 per cent year on year, lower than the 7.7 per cent expansion recorded in August. It also missed the 11.5 per cent rise forecast by economists in a Bloomberg poll.
Nodx has now risen in seven out of nine months of this year, compared with only one month of gain last year. The Government in August raised Singapore's 2020 trade forecasts, predicting Nodx to grow by 3 per cent to 5 per cent year on year, reversing an earlier view of a 1 per cent to 4 per cent fall.
Month on month and seasonally adjusted, Nodx in September shrank 11.3 per cent, after a 10.5 per cent expansion the previous month, as the decline in non-electronics exports outweighed the growth in electronics shipments.
September Nodx was mainly driven by electronic goods from a low base last year. Electronics shipments grew 21.4 per cent year on year, after a 5.7 per cent increase the previous month.
Integrated circuits, disk media products and parts of PCs grew by 30.1 per cent, 15.2 per cent and 22.7 per cent respectively, contributing the most to the growth in electronics shipments.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye noted that semiconductors were the biggest driver for both electronics in Nodx and non-oil re-exports, suggesting that global demand for such items remains firm as more people are buying work-from-home gadgets and industries are going digital amid the pandemic.
They added: “September’s export performance reinforces our thesis that the Covid-19 pandemic’s impact on manufacturing supply chains and trade flows has been temporary and cushioned by a strong recovery in electronics demand.”
Barclays Bank economist Brian Tan said the slower rate of growth in overall Nodx was mainly due to a sharp pullback in non-electronics exports, especially shipments of non-monetary gold, which offset the boost from a favourable base effect in electronics exports.
ESG data showed non-electronics Nodx rose by 1.8 per cent in September, following the 8.3 per cent growth the previous month. Non-monetary gold (+53.4 per cent), specialised machinery (+34.2 per cent) and food preparations (+30.7 per cent) contributed the most to the growth in non-electronics Nodx.
OCBC Bank's head of treasury research and strategy, Ms Selena Ling, said that while non-electronics exports grew, there was an unexpected drag from pharmaceuticals exports that plunged 27.3 per cent year on year.
“(This) could be due to the high base last year. Nevertheless, the volatile nature of the Covid pandemic and vacillating global vaccine prospects, with the recent pause in two vaccine trials, could also mean that one cannot rely on pharmaceuticals exports to drive Nodx growth,” she said.
Economist Sung Eun Jung at Oxford Economics said: "While Singapore’s trade has turned the corner after contracting in May, its recovery path remains uncertain as countries still grapple with localised outbreaks. Accordingly, we expect the recovery in trade to ease in the fourth quarter."
Ms Ling said that Nodx growth in the fourth quarter could ease to around 2.2 per cent year on year.
“Looking ahead, I expect fourth-quarter Nodx growth may run into a more bumpy road, given the latest Covid uptick in Europe and the conditional movement control order in Malaysia. It remains to be seen if Nodx growth momentum can be sustained in the months ahead for these key Nodx markets as consumer demand may take a hit from the re-tightened restrictions.”
She added that a contested outcome of the upcoming US elections could create a prolonged period of uncertainty and weigh on overall business and consumer confidence.
Shipments reached $13.8 billion in September, down from $15.6 billion the previous month, on a seasonally adjusted basis.
Nodx to Singapore’s top markets as a whole grew in September, though exports to Indonesia, Hong Kong, Thailand and South Korea declined. The largest contributors to the Nodx growth were the European Union’s 27 member states (+60.5 per cent), Malaysia (+28.8 per cent) and the United States (+3.7 per cent).
Non-oil re-exports rose by 5.1 per cent year on year in September, after a flat performance in August, as the growth in electronics re-exports outweighed the decline in non-electronics.
Total trade shrank 1.9 per cent year on year in September, taking a continued hit from the slump in oil trade. This was improvement though from the 7.8 per cent fall the previous month.
Total exports declined by 2.1 per cent, after August’s 4.8 per cent decline. Total imports fell 1.6 per cent, following the 11 per cent slide in the previous month.