Surprise 4.9% rise in non-oil exports

Rebound after 3 months of decline, but expert cautions there is little evidence of turnaround

Total trade grew over the year as well, increasing 3.3 per cent in February, after 4.2 per cent growth in the preceding month.
Total trade grew over the year as well, increasing 3.3 per cent in February, after 4.2 per cent growth in the preceding month. PHOTO: ST FILE

Singapore's non-oil domestic exports (Nodx) sprang a surprise last month, rising 4.9 per cent after three straight months of decline, but economists cautioned that the rebound may not last.

They said there tends to be distortions in data for the first two months of the year, with exports affected by the timing of Chinese New Year festivities.

"There is little evidence to suggest that a turnaround in global demand is round the corner," said OCBC Bank's head of treasury research and strategy Selena Ling.

One factor is the likelihood of rising business caution, she said, citing recent downgrades in global growth forecasts.

A waning technology cycle, marked by less demand, as well as mixed signals from Chinese economic data and unresolved US-China trade negotiations, add to sentiment that Nodx could remain flat or slightly negative this year.

Last month's increase, which defied expectations of a 1.6 per cent dip in a Bloomberg poll of analysts, came on the back of growth in non-electronic shipments. It followed a weak start in January, when exports fell 10.1 per cent year on year.

While the latest figures are encouraging, it remains to be seen if the uptick can be sustained.

UOB economist Barnabas Gan said the average of January and February figures show a 2.6 per cent contraction in the first two months of this year, down from 3.5 per cent growth in the same period last year.

He noted that electronic exports in particular have been negative for the past year or so. They remained weak last month, down 8 per cent, after a 15.9 per cent drop in January.

Shipments of disk media products, personal computers as well as diodes and transistors contributed the most to the fall.

Last month, growth came on the back of non-electronic Nodx instead, which rose 9.4 per cent after a 7.9 per cent decline in January. This was mainly due to non-monetary gold, pharmaceuticals and food preparations.

Singapore's non-electronic exports generally outweigh exports of electronics, providing some support overall, said Mr Gan. But electronics tend to be less volatile than clusters like pharmaceuticals, suggesting that the current growth may not be sustainable.

Last month, non-oil exports to most of Singapore's top markets rose as well, except to Japan, South Korea, Europe and Indonesia. The rise was mainly due to China, Hong Kong and the United States.

Maybank Kim Eng economist Chua Hak Bin flagged the "cloudy" outlook for technology exports, with major electronics exporter South Korea seeing its steepest exports fall in nearly three years. China's exports also declined more than 20 per cent.

"A trade recovery hinges on the US and China reaching a trade deal," he said. But he also noted clear signs of rising foreign direct investment in manufacturing across Asean as companies look to diversify their network, adding that Singapore may benefit from this.

A version of this article appeared in the print edition of The Straits Times on March 19, 2019, with the headline 'Surprise 4.9% rise in non-oil exports'. Subscribe