SINGAPORE - Singapore has raised its full-year trade forecasts after its export performance in the second quarter of 2022 came in better than expected due to higher oil prices and electronics demand.

Total merchandise trade is expected to grow by 15 per cent to 16 per cent this year, up from the previous projection of 8 per cent to 10 per cent, while non-oil domestic exports (Nodx) is expected to grow by 5 per cent to 6 per cent, up from the previous forecast of 3 per cent to 5 per cent, Enterprise Singapore (EnterpriseSG) said on Thursday (Aug 11).

"Higher oil prices and robust global semiconductor demand are likely to continue in 2022. These should support growth in oil trade in nominal terms and Nodx respectively, and in turn total trade," EnterpriseSG said.

Some global chipmakers and analysts have been warning of a sharp slowdown in chip demand as Covid-19 lockdowns end and household budgets are hammered by inflation.

EnterpriseSG said global semiconductor revenue is expected rise 7.4 per cent in 2022, based on data from research and consultancy firm Gartner. This is down, however, from Gartner’s earlier projection of 13.6 per cent.

OCBC Bank chief economist Selena Ling said: “Most of the good news on the global electronics front has been priced in and given the slowdown under way in major economies like the US, Europe and China, some moderation in growth expectations is necessary given the high base last year.

“Similarly for Singapore, electronics is coming off a high base last year and I expect manufacturing growth to slow to just 1.3 per cent by the fourth quarter of this year.”

For the second quarter of this year, Nodx increased 9.1 per cent year on year, easing from the 11.4 per cent growth in the first quarter. The expansion was mainly due to the growth in shipments of non-electronic products, which rose by 8.9 per cent in the second quarter.

Exports for electronic products also expanded, rising 9.7 per cent in the second quarter - its ninth straight month of growth - following the 12.3 per cent increase in the previous quarter.

Nodx to Singapore’s top 10 markets as a whole grew in the second quarter, although exports to Hong Kong, South Korea, China and countries in the European Union declined.

The biggest contributors to Nodx growth were Malaysia, Taiwan and Indonesia. 

Oil domestic exports also rose in nominal terms, growing 73 per cent in the second quarter year on year. However, in actual volume, oil domestic exports fell 8.2 per cent in the second quarter.

Total merchandise trade grew 28.1 per cent year on year in the second quarter , extending the 20.8 per cent growth in the first quarter.

Total services trade also grew, expanding 12.9 per cent in the second quarter to reach $168 billion for the quarter, bolstered by growth in both exports and imports.

Despite the better-than-expected performance, uncertainty still remains, EnterpriseSG said. 

It noted that the International Monetary Fund (IMF) lowered its forecast for global economic growth this year to 3.2 per cent from 3.6 per cent previously.

Most of Singapore’s key trade partners, such as China and the United States, are expected to grow this year, although at a slower pace compared with last year.

IMF had also noted several risks, including higher-than-expected inflation, as well as further spillover effects from the Russia-Ukraine conflict. 

“These risks may in turn constrain production and GDP (gross domestic product) growth in some external economies,” said EnterpriseSG.