Singapore’s non-oil domestic exports (NODX) for the month of January fell by 25.0% y-o-y, making this the fourth straight month of slumps.
The drop, which came close to OCBC Bank's chief economist & head of treasury research & strategy Selena Ling's forecast of -24.6% y-o-y, is also the worst start to the year since 2009, she notes.
January’s decline was due to the drop in electronics and non-electronics exports declined as well as high base in January 2022.
"If pharmaceutical exports did not expand 22.8% y-o-y in January, the overall NODX contraction could have been worse," Ling points out.
This was echoed by UOB's senior economist Alvin Liew, who pointed out that the difference between January and December 2022's NODX figures was the strong rebound in pharmaceutical exports. In January, pharmaceutical exports had a nominal value of $1.757 billion, which was the highest in five months.
Analysts previously anticipated that Singapore’s NODX for the first half of 2023 would see a further slowdown after December 2022’s NODX decline.
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In January, electronic NODX fell by 26.8% y-o-y as integrated circuits (ICs), disk media products and parts of personal computers (PCs) fell the most at 31.5%, 36.1% and 42.6% respectively.
Non-electronic NODX fell by 24.5% y-o-y. This was led by the decreases of non-monetary gold (-75.4%), structures of ships & boats (-96.3%) and specialised machinery (-16.4%).
On a m-o-m seasonally adjusted basis, NODX increased by 0.9% to $14.5 billion.
NODX to top 10 markets
NODX to the top 10 markets declined as a whole in January. The largest contributors to the decline were China, the US and Hong Kong at -41.1%, -31.5% and -55.1% respectively. Meanwhile, NODX to the EU27 and Japan rose.
NODX to China declined by 41.1% due to specialised machinery (-40.8%), petrochemicals (-28.6%) and pharmaceuticals (-79.9%). At the same time, NODX to the US contracted by 31.5% due to structures of ships & boats (-100.0%), specialised machinery (-51.7%) and food preparations (-20.6%). NODX to Hong Kong declined by 55.1% due to ICs (-65.3%), disk media products (-87.3%) and specialised machinery (-35.7%).
NODX to emerging markets also fell by 47.8% y-o-y. This was mainly due to Cambodia, Laos, Myanmar, and Vietnam (CLMV), South Asia and the Middle East at -77.7%, -27.8% and -37.8% respectively.
NORX
Singapore’s non-oil re-exports also declined by 10.4% y-o-y in January as both electronics and non-electronics re-exports fell.
Electronic NORX fell by 13.4% y-o-y due to ICs (-21.6%), parts of PCs (-22.3%) and PCs (-16.6%).
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Non-electronic NORX fell by 6.7% due to petrochemicals (-39.0%), medical apparatus (-51.0%) and aircraft parts (-22.3%).
NORX to the top 10 markets fell as a whole in January with Hong Kong (-41.6%), Taiwan (-31.3%) and China (-3.6%) being the top contributors to the decline.
On a m-o-m seasonally adjusted basis, NORX grew by 3.7% to $30.4 billion.
Oil domestic exports
Oil domestic exports expanded by 29.4% y-o-y in January thanks to higher exports to Malaysia (+57.6%), which contributed the most to the y-o-y growth.
In volume terms, oil domestic exports grew by 24.4% in January, following the 12.8% rise in the previous month.
On a m-o-m seasonally adjusted basis, oil domestic exports declined by 8.5% during the month.
Total trade
Total trade fell by 10.4% y-o-y in January as total exports fell by 9.6%. Total imports also contracted by 11.3%.
On a m-o-m seasonally adjusted basis, total trade fell by 0.2% in January to $103.1 billion.
Economists say...
"Given that 1Q2023 demand and growth conditions are likely to remain soft, S’pore’s NODX prospects may remain soft in the next few months, until there are clearer signs of Chinese confidence and demand picking up more speed post-reopening," says OCBC's Ling. "Fortunately, the US and EU have avoided a growth contraction in 4Q2022 and the recent signs appear to be pointing to a soft landing rather than a hard landing ahead.
"Our 2023 NODX growth forecast remains intact at -3% y-o-y, slightly below the official NODX forecast of 0% to -2% by Enterprise Singapore. Manufacturing, especially electronics, momentum may only stabilise and turn around in the latter part of this year. Geopolitical tensions, especially US-China relations remain cloudy at this juncture," she adds.
Looking ahead, UOB's Liew is continuing to "expect global demand to head towards a downturn on the back of more aggressive monetary policy tightening and worries about economic slowdown in the developed markets".
"The weaker regional demand for NODX added to this downbeat outlook narrative. It should also be noted that high base effect will continue to work against the NODX going into early 2023, as seen in January NODX," he adds. "The cracks in the export outlook are ever more visible now with the persistent and deeper y-o-y contractions. We are likely to see a few more months of y-o-y
declines in NODX for 1H2023 before factoring some improvement in the second half of the year. We expect full-year NODX to contract by -5.5% in 2023."
RHB Group Research's senior economist Barnabas Gan says he expects Singapore's NODX to contract further in the 1H2023 before staging a rebound in 2H2023. On a momentum basis, NODX has troughed in the 4Q2022, he says.
"However, the improving momentum in Singapore’s NODX suggest that the worst may be over – y-o-y numbers may still decline, but sequential growth may improve henceforth," he adds.
