S'pore non-oil export growth slows to 9.5% in Feb, below forecast

Singapore's key shipments saw a slower pace of growth last month and the nation's trade demand and economic growth face risks in the months ahead from disruptions to global supply chains.

The headwinds generated by Russia's invasion of Ukraine come alongside Covid-19 lockdowns in China and the United States Federal Reserve's interest rate hike, which are contributing to overall uncertainty in the global economy, analysts said.

Non-oil domestic exports (Nodx) rose 9.5 per cent year on year in February, according to data released by Enterprise Singapore (ESG) yesterday. Last month's showing was below the median forecast of 16.5 per cent tipped by analysts in a Bloomberg poll, and down from the 17.6 per cent expansion in January.

Electronics Nodx grew 11.6 per cent last month, slower than the 14 per cent year-on-year rise in January. Shipments were largely bolstered by export growth in integrated circuits, disk media products and capacitors.

Non-electronics Nodx increased 8.8 per cent last month, down from the 18.6 per cent expansion in January, with structures of ships and boats, pharmaceuticals and petrochemicals the largest contributors to growth.

On a month-on-month seasonally adjusted basis, non-oil exports dipped 2.8 per cent last month, compared with the 5 per cent increase seen in the previous month.

This was due to a decline in non-electronics exports, despite growth in electronics shipments. Nodx reached $17.6 billion last month, lower than January's $18.1 billion, on a seasonally adjusted basis.

ING senior economist Nicholas Mapa said in a report: "With the global growth outlook dimming over the past few weeks, we can expect trade activity to slow further, with Nodx likewise expected to see more moderation in the coming months."

The slowing expansion of non-oil exports will likely sap growth momentum for Singapore, he said.

Oxford Economics senior economist Jung Sung Eun said that while real exports sustained their growth momentum last month, this is expected to weaken in the coming months as the Russia-Ukraine war dampens global trade and growth prospects, and adds to price pressures.

"Ongoing supply chain disruptions pose further challenges to trade, with localised lockdowns in China adding to temporary disruptions," she said.

UOB economist Barnabas Gan acknowledged the potential negative impact to Singapore's trade given the ongoing geopolitical tensions, but pointed out that Singapore's external environment has remained buoyant despite Covid-19 risks.

The bank remains of the view that Singapore is well positioned to ride out the endemic Covid-19 recovery in 2022, but also sounded caution over downside risks from rising geopolitical tensions, which could depress trade demand and cause raw material shortages.

On a more positive note, Barclays regional economist Brian Tan said that the below-expectations showing last month is unlikely to be reflective of a broader drop in external demand, especially as electronics exports rose month on month. "Exports of specialised machinery are also unlikely to stay low for long when there is still ample global demand for semiconductors," Mr Tan wrote.

ESG said that Nodx to the top 10 markets as a whole rose last month, mainly due to higher exports to the European Union, China and Malaysia, driven by an increase in pharmaceutical and specialised machinery shipments.

Growth in overall merchandise trade and non-oil exports is officially forecast to drop to 0 per cent to 2 per cent for the whole of this year, partly due to the high-base effect of last year when Nodx rebounded by 12.1 per cent.