Singapore’s non-oil domestic exports (NODX) for the month of February fell by 15.6% y-o-y, following the 25% drop in January.
Both electronics and non-electronics declined.
Electronic NODX fell by 26.5% y-o-y, led by integrated circuits (ICs), disk media products and capacitors, which contracted by 34.2%, 45.5% and 76.4% respectively.
Non-electronic NODX fell by 12.1% y-o-y as structures of ships & boats (-100.0%), petrochemicals (-24.4%) and pharmaceuticals (-21.5%) contributed the most to the decline.
On a m-o-m seasonally adjusted basis, NODX fell by 8.0% to $13.3 billion.
NODX to top 10 markets
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NODX to the top 10 markets declined as a whole in February. The largest contributors to the decline were the EU 27 (-34.2%), Hong Kong (-46.4%) and Taiwan (-29.3%).
Meanwhile, NODX to the US, Japan and Thailand rose.
NODX to the EU 27 fell due to the declines in pharmaceuticals (-69.9%), petrochemicals (-49.5%) and disk media products (-67.8%). NODX to Hong Kong fell as ICs, disk media products and iron or steep scrap fell by 59.9%, 81.3% and 88.6% respectively.
NODX to Taiwan fell due to ICs (-38.6%), non-monetary gold (-76.1%) and petrochemicals (-38.0%).
NODX to emerging markets decreased by 3.3% in February, following the 47.8% contraction in January 2023. The decline in NODX to emerging markets was mainly due to Cambodia, Laos, Myanmar and Vietnam or CLMV (-38.9%), Latin America (-16.9%) and Eastern & Southern Europe or non-EU (-65.7%).
NORX
Singapore’s non-oil re-exports grew by 1.1% on a y-o-y basis in February as non-electronics rose while electronics fell. This is after the 10.4% decrease in January.
During the month, electronic NORX fell by 13.1% while non-electronic NORX expanded. The contraction in electronic NORX was due to ICs, PCs and parts of ICs at 23.3%, 24.1% and 18.7%.
Non-electronic NORX expanded by 19.4% due to non-monetary gold (+177.2%), non-electric engines & motors (+13.3%) and aircraft parts (+40.0%).
NORX to the top 10 markets as a whole rose in February with Indonesia (44.7%), the US (25.6%) and China (8.1%) being the top contributors.
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On a m-o-m seasonally adjusted basis, NORX fell by 5.0% to $28.9 billion.
Total trade
Total trade declined in February as exports and imports decreased.
Total exports fell by 3.0% and total imports fell by 4.5%.
On a m-o-m seasonally adjusted basis, total trade fell by 6.3% to $96.6 billion.
Economists' analysis
UOB’s senior economist Alvin Liew and the rest of the bank’s global economics and markets research team is keeping its estimate that Singapore’s full-year NODX will contract by 5.5% in 2023.
February may have seen some improvement in the form of less negative prints on NODX declines from the major export destinations of China and the Asean region, the team cautions investors against prematurely calling this to be the start of an uptrend.
To this end, it continues to “expect weakness in global demand on the back of further monetary policy tightening and worries about economic slowdown in the developed markets. It should also be noted that high base effect will continue to work against the NODX in early 2023, as seen in the months of January and February,” the team writes.
It adds that Singapore is likely to see a few more months of y-o-y declines in NODX during the 1H2023 before seeing some improvement in the second half of the year.
CGS-CIMB Research’s economists Dania Irdina Azidi and Nazmi Idrus is seeing a “major downside risk” to Singapore’s trade performance as global demand slows.
The economists are keeping their GDP growth projection of 2.0% unchanged for 2023 though February’s decline came in wider than their forecast of -14.1% but narrower than Bloomberg’s consensus estimate of -15.8%.
In Singapore’s NODX to the top 10 markets, the economists note that exports to China improved and see that the upward trend may continue although it may take time for NODX to China to recover.
“We reiterate that an improvement in NODX to China may come soon, possibly in 2Q2023 as recovery momentum builds up, in our view,” they write. “Meanwhile, we maintain our prediction that exports to the EU would remain low as expectations for a recession in the region have sparked concerns of weakening global demand.”
“We see an early sign of this development with the 34.2% y-o-y decline in NODX to the EU in February. On the other hand, NODX to the US expanded unexpectedly in February, by 8.7% y-o-y, in contrast to the previous month’s dismal performance,” they add.
“Given these figures, we see moderate overall growth for the city-state’s NODX in 1H2023, as China, the US and Europe had remained to be the largest markets for Singapore NODX in 2022,” they continue.
Maybank cuts NODX outlook
Maybank economists Chua Hak Bin and Lee Ju Ye have downgraded their NODX forecast to -7% to -4% from -4% to -1%.
“[This is] to account for the weaker performance and rising uncertainties to the global outlook in the wake of the bank turmoil in the US and Europe,” they write.
In addition, the economists expect Singapore’s NODX to contract in the 1H2023 in spite of China’s reopening as demand from other major markets decline.
“Enterprise Singapore will likely downgrade its NODX forecast (-2% to 0%) in the next review in May. This will be the worst export performance since the 2019 chip downturn, when NODX plunged by -9.2%,” they predict.
In particular, the demand for electronics is likely to remain weak amid the global growth downturn, noting that exports of chip powerhouses such as South Korea and Taiwan are underperforming in the 2M2023 compared to Indonesia which mainly exports commodities such as coal, palm oil, and iron & steel to China.
The economists’ GDP growth forecast for 2023 is kept at 1.7% though they expect growth to be uneven during the year.
