Strong export growth in May after months of slower expansion

Singapore's key exports grew strongly last month, mainly due to non-electronic shipments, though electronic shipments also grew.

After five straight months of slower growth, non-oil domestic exports (Nodx) rose 12.4 per cent year on year in May from a low base a year ago, according to data released by Enterprise Singapore (EnterpriseSG) yesterday.

This follows the 6.4 per cent growth in April and is better than the 7.5 per cent median forecast of analysts polled by Bloomberg.

Mr Khoon Goh, head of Asia research at Australia & New Zealand Banking Group (ANZ), said the May Nodx was driven mainly by shipments of non-monetary gold, which rose 344 per cent year on year.

He added that if non-monetary gold is excluded from the numbers, Nodx growth for May would have been a more modest 5.7 per cent.

Non-monetary gold refers to gold that is not held as reserve assets by the world's central banks.

Non-electronic shipments increased 12.2 per cent year on year in May, following the 4.6 per cent growth in the previous month.

Besides non-monetary gold, specialised machinery and measuring instruments contributed the most to the growth in non-electronic Nodx.

Pharmaceuticals, however, fell for the second month, down by a larger 8.6 per cent versus the 6 per cent fall in April.

Electronic shipments rose 12.9 per cent year on year, slightly faster than the 12.8 per cent growth in April. Exports of integrated circuits, parts of integrated circuits and disk media products put in the strongest performance.

On a month-on-month seasonally adjusted basis, Nodx rose 3.2 per cent in May to $17.1 billion, after falling 3.3 per cent in the previous month.

Maybank economists Chua Hak Bin and Lee Ju Ye noted in a report that exports continue to be driven by higher prices rather than volumes.

Singapore's Nodx numbers are stated in nominal terms. Stripping out the effect of higher prices, the Maybank economists said real Nodx based on 2018 prices actually contracted for the fourth straight month in May by 1 per cent.

The pace of decline in real Nodx has, however, eased from the 4.7 per cent fall in April.

Looking at Nodx by region, shipments to Singapore's top 10 markets as a whole rose, led by Indonesia, Thailand, Malaysia and Taiwan.

However, shipments to the United States and the 27 European Union countries fell last month after rising the previous month, while those to South Korea and Hong Kong continued to decline but at a slower pace.

Shipments to China rebounded 0.2 per cent last month, following the 10.6 per cent fall in April.

On a year-on-year basis, total trade grew by 32.4 per cent last month, after rising 21.6 per cent in April.

Total exports grew by 26.9 per cent, while total imports expanded by 38.7 per cent.

On a seasonally adjusted basis, the level of total trade reached $122.2 billion last month.

ANZ's Mr Goh said that while Singapore's overall export growth remains robust, he expects its performance in the second half of the year to slow, as the slowdown in the US economy and the broader tightening in global financial conditions start to bite.

However, he expects any downside to be cushioned by strong intra-regional trade flows as domestic demand rebounds in South-east Asia.

Mr Goh added that the recent easing of restrictions in Shanghai should lead to a further near-term recovery in exports to China.

Maybank's Dr Chua and Ms Lee shared Mr Goh's concerns.

They said the Russia-Ukraine war, China's slowdown and global monetary tightening may dampen recovery in the second half and weigh on global trade.

They added that the more aggressive rate hike trajectory in the US has heightened the risks of the US and Singapore tipping into recession in 2023/2024.

Last month, Singapore raised its full-year trade forecasts after a better-than-expected showing in the first quarter.

On a year-on-year basis, Nodx grew by 11.4 per cent in the first quarter, following the 20.1 per cent rise in the previous quarter, EnterpriseSG data showed.

Nodx is now expected to grow 3 per cent to 5 per cent for the whole of 2022.