Will Singapore's early export recovery be 'Trumped'?: Analysts' quick takes

Containers are stacked up at PSA's Tanjong Pagar container terminal in Singapore, on July 24, 2015.
Containers are stacked up at PSA's Tanjong Pagar container terminal in Singapore, on July 24, 2015.PHOTO: REUTERS

SINGAPORE - Singapore's non-oil domestic exports (NODX) rose 9.4 per cent from a year ago, above median market forecasts of 5.8 per cent growth. The strong performance comes after the 11.5 per cent jump in NODX in November.

Here are some quick reactions from analysts:

ANZ economist Ng Weiwen: Will green shoots in Singapore's NODX be Trumped?

Given Singapore is the canary in the coal mine, today's positive NODX print corroborates with recent trade data which showed a notable rebound in exports in most Asian countries. This suggests the tentative end of the trade recession which has plagued the region since late 2014.

The rebound is broad based, electronics as well as petrochemicals. Electronic exports are supported by strong semiconductor production and an increase in chip prices. Petrochem exports have also been buoyed by the recovery in oil prices, especially after Opec reached agreement on production cuts.

While this development is encouraging, we are cognisant of the risk that the rebound in NODX is in its nascent stage and could be dampened or even derailed by geopolitical tensions and rise in protectionism.

In particular, we think the risk of US-Sino trade tensions has increased. Any loss of momentum in China's trade will have repercussions across the rest of Asia. Furthermore, if President Trump does manage to undertake a sharply protectionist trade policy stance, levy extra taxes on US importers and label major trade partners as currency manipulators, this may well attract retaliatory measures from trading partners and exacerbate trade tensions.

Consequently, these dynamics would be negative for Singapore who is still wedded to the old export model and is the Asean economy most leveraged to the global trade cycle.

UOB economist Francis Tan: Strong December NODX bodes well but watch out for more trade protectionist measures

Overall NODX expansion in 2017 could well come from the recent optimism in Singapore's electronics exports. The past five months of expansion (after an 18-month consecutive decline) in the new export orders for electronics PMI points to a more sustained pickup in Singapore's electronics exports at least in the first half of 2017.

With the December trade numbers released today, Singapore's 2016 NODX contracted 3.2 per cent, marking the fourth full year of NODX decline. Although trend NODX growth seems to point to a recovery in Singapore's export numbers in 2017, we are carefully watching the negative impact from the anti-globalisation rhetoric that has been fueling developed markets' sentiments.

One country to watch out is still the US. In a paper by the Ministry of Trade and Industry, the US is the second largest source of final demand of the goods produced in Singapore (Asean is the largest) and further trade-protectionist measures will only hurt the path of our export recovery.

We maintain our forecast of 2017 NODX growth at 0.7 per cent.

OCBC Bank head of treasury research & strategy Selena Ling: Tipping NODX to grow 0-2 per cent in 2017

The data does suggest that NODX has bottomed in 2H16. As we highlighted in our 2017 Global Outlook report, we anticipate that global demand for OLED displays, dual-lens cameras, fingerprint technology and touch screens could remain key industry drivers in 2017 and sustain the manufacturing momentum for the first half of 2017.

We tip 2017 NODX growth at 0-2 per cent year on year, with the caveat that Trump's anti-trade/China policies if they materialise could present a potential headwind.