Singapore's export recovery has grown even stronger, with data for last month surpassing all expectations and dispelling fears over the health of the economy.
It marked the fourth straight month of resurgent export figures as manufacturers spent on capital and global growth picked up.
February's 21.5 per cent growth in non-oil domestic exports (Nodx) easily beat a consensus forecast of a 12.5 per cent gain. It came on the back of 8.6 per cent growth in January and 9.1 per cent in December. Both electronics and non-electronics exports drove the gains.
Shipments to all of Singapore's top 10 markets rose.
"The speed at which exports have recovered is surprising," Maybank Kim Eng economist Chua Hak Bin said. "There has been a pickup in capital expenditure by companies that had been very careful about investing in equipment, property, construction and infrastructure, as well as a global recovery supported by China and the United States."
A turnaround in global electronics led by semiconductor demand for smartphone production should boost manufacturing this year, Citi economist Kit Wei Zheng said.
Brisker global trade has fuelled a recovery in local manufacturing. But the service sector, which accounts for about two-thirds of Singapore's economy, lags behind.
Still, there are signs of green shoots in the local transport and storage sector, which grew 5.4 per cent in the fourth quarter year on year as more containers and cargo moved through Singapore ports.
Healthier manufacturing growth could spill over into financial and business services this quarter as domestic business loan growth and regional financing start to increase.
UOB economist Francis Tan believes the service sector will contribute more to growth in the second half of the year. But he is not sure if the uptick in manufacturing will be sufficient to absorb excess capacity in the shipping industry.
Electronics Nodx surged 17.2 per cent in a fourth month of gains, led by shipments of integrated circuits, PC parts and disk media products.
Non-electronics Nodx jumped by 23.3 per cent last month, up from a 9.8 per cent expansion in January, the IE Singapore data showed.
"Petrochemicals, specialised machinery and non-monetary gold expanded by 45.3 per cent, 111.8 per cent and 104.3 per cent respectively, contributing the most to the rise in non-electronics Nodx," IE Singapore said.
Of the biggest markets, China surged 65.1 per cent, the European Union rose 28.7 per cent and Taiwan jumped 54 per cent. But Nomura economists Euben Paracuelles and Brian Tan said in a note: "The rise in Nodx only partly reflected a favourable base effect from the earlier Chinese New Year holidays this year. We expect Nodx growth to moderate as we do not expect the surge in gold exports to sustain. We believe the economy is still on weak footing, and remains vulnerable to the threat of protectionist policies in the US."
UOB's Mr Tan agreed. "The US is the second-largest source of final demand of the goods produced in Singapore, and further trade-protectionistic measures will only hurt our export recovery."