Growth in Singapore's non-oil domestic exports (Nodx) picked up pace last month, boosting expectations that this year's shipments will beat government estimates.
Nodx rose 7.7 per cent year on year in August, mainly driven by non-electronic goods, according to data from Enterprise Singapore (ESG) yesterday. The 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 this year, a robust performance when compared with only one month of gain last year.
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.
ESG 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.
Maybank Kim Eng Securities analyst Lee Ju Ye noted Singapore's Nodx has risen by 5.9 per cent in the year to date, in contrast to the plunge of 11 per cent during the global financial crisis in 2009. Nodx dropped 14 per cent in 2001 in the wake of the recession caused by the dot.com 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," Ms Lee said.
"We are, however, mindful of the downside risks, including a resurgence of Covid-19 in parts of Europe, and intensifying US-China tensions that could disrupt global supply chains," she added.
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 last month, following the 6.9 per cent growth in the previous month. The gains were led by non-monetary gold, specialised machinery and food preparations.
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 downturn.
Electronic shipments rose 5.7 per cent, after a 2.8 per cent rise in July, with integrated circuits or chips, disk media products and personal computers contributing the most.
Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said electronics and non-electronics exports have chalked up year-to-date growth of 4 per cent and 6.5 per cent, respectively.
"At the current run rate, it is plausible that the full-year Nodx growth will be at the top end of the ESG forecast range," she said.
Ms Ling noted that notwithstanding the US-China tensions, the recovery in China is being aided by its focus on domestic growth.
Global growth prospects have improved too. The Organisation for Economic Cooperation and Development recently upgraded its 2020 world growth forecast to a milder contraction of 4.5 per cent, from an earlier estimate of minus 6 per cent.
The US Federal Reserve now expects US gross domestic product growth this year to shrink 3.7 per cent, compared with minus 6.5 per cent previously, Ms Ling said.
Nodx to Singapore's top markets as a whole grew last month, though exports to Indonesia, Hong Kong, Malaysia and Thailand declined. The largest contributors to the Nodx growth were China, the European Union and the United States.
But Ms Sung Eun Jung, a Singapore-based economist at Oxford Economics, said weaker and uneven data for re-exports calls for some caution on the outlook.
ESG data showed non-oil re-exports rose by 0.1 per cent year on year last month, after a 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.