Singapore key exports surge 15.7% in July, much stronger than expected

SINGAPORE - Singapore’s key exports saw an unexpectedly big jump in July, reversing a five-month slide as both electronics and non-electronics shipments grew strongly.

Non-oil domestic exports (Nodx) grew 15.7 per cent year on year in July, compared with a revised 8.8 per cent contraction in June and the 1.2 per cent expansion forecast by economists in a Bloomberg poll.

Enterprise Singapore, which released the latest trade data on Aug 16, told The Straits Times that it remains “cautiously optimistic for the recovery going into the second half of the year” but that key downside risks remain, including global export recovery for the rest of 2024 coming in weaker than expected.

“We are continuing to monitor external developments closely and will adjust our forecasts as necessary,” it said.

The trade agency on Aug 13 had narrowed its 2024 Nodx forecast to 4 per cent to 5 per cent, the lower half of its earlier 4 per cent to 6 per cent projection. 

But it told ST that July’s 15.7 per cent Nodx growth “was in line with our expectations of an electronics recovery in the second half of 2024, driven by AI (artificial intelligence) servers and consumer devices”.

Enterprise Singapore said: “This comes against the backdrop of even stronger global chips sales of 19.2 per cent for 2024, up from May’s forecast of 17.4 per cent by Gartner.

“Closer to home, based on the latest business expectations survey, a net weighted balance of 36 per cent of firms in the electronics cluster forecast new export orders for the third quarter of 2024.

“Overall, the above factors were accounted for in our recent forecast revision of 4 per cent to 5 per cent Nodx growth in 2024.”

Maybank economist Brian Lee said most private economists had expected a more gradual recovery in electronics, given port disruptions and lingering weakness in demand for industrial and automotive chips.

The surge in non-monetary gold exports helped to magnify Nodx growth in July, he said. Excluding this, Nodx growth would have been closer to 12 per cent, he noted.

On a month-on-month seasonally adjusted basis, Nodx expanded by 12.2 per cent to $15.4 billion in July 2024, after a 0.4 per cent decline in June. This also topped the 2.2 per cent rise tipped in the Reuters poll.

Total trade increased 13.7 per cent in July, extending a 1.2 per cent growth in June as both exports and imports grew.

Electronics Nodx expanded by 16.5 per cent year on year in July, reversing the 9.5 per cent decline in June, underpinned by growth in integrated circuits or semiconductors, the largest component. 

Enterprise Singapore noted Singapore’s electronics Nodx growth had broadened beyond integrated circuits – the largest component of electronics – to include disk media products and other computer peripherals.

The broadening of electronics shipment growth beyond integrated circuits is an encouraging signal that the electronics recovery is gaining traction, said OCBC Bank’s chief economist Selena Ling.

Non-electronics shipments expanded by 15.5 per cent in July, after an 8.6 per cent decline in June. Non-monetary gold, petrochemicals and specialised machinery contributed the most to the growth.

The United States, Malaysia and China were the largest contributors to the increase in shipments, while those to the European Union, Japan, Hong Kong and South Korea declined.

DBS Bank economist Chua Han Teng said Singapore exports are still on track for a gradual recovery on the back of better external demand.

“The recovery in Singapore’s electronics shipments is broadening, and we anticipate the ongoing electronics recovery to benefit overall Nodx,” he said.

Mr Chua expects global tech demand to be supported by the replacement of smartphones and personal computers, as well as the broadening use of AI applications.

But the improvement in exports remains fragile amid ongoing geopolitical conflicts that could disrupt supply chains, as well as uncertainties over the economic growth of China and the US, he said.

Maybank’s Mr Lee expects exports to recover and broaden further in the second half. 

“The recovery will be driven by electronics including integrated circuits and pharmaceuticals, although growth may taper from the exceptional July print,” he said. 

Port congestion and shipment delays could remain a concern in the near term, he said.

OCBC’s Ms Ling expects full-year Nodx to grow 3.5 per cent to 4 per cent year on year, assuming no recession in the US, electronics recovery, continued demand from China and resilient domestic consumption in Asean.

RHB acting group chief economist Barnabas Gan upgraded his full-year Nodx growth to 1.5 per cent from 0.5 per cent following the stronger-than-expected July figures.