Singapore’s non-oil domestic exports (NODX) expanded 12.8% y-o-y in January to $15.4 billion on the back of a low base from the year before, according to official data released on Feb 17 by trade agency Enterprise Singapore (ESG).

In January 2020, NODX shrank by 3.3% to $13.4 billion, making it the lowest monthly level in 2020 from an average of $14.4 billion.

The higher growth, which follows the 6.8% growth in December 2020, is led by growth in the non-electronics sectors, including specialised machinery, non-monetary gold and petrochemicals.

The electronics sector also expanded during the month.

On a seasonally adjusted m-o-m basis, exports rose by 7.0% in January, following the 4.8% increase in December 2020.

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Both electronic and non-electronic domestic exports grew.

On a y-o-y basis, electronic NODX grew by 13.5% led by ICs, telecommunications equipment and diodes and transistors with expansions of 13.9%, 65.1% and 27.4% respectively.

Non-electronic NODX expanded by 12.5% y-o-y led by specialised machinery, non-monetary gold and petrochemicals with y-o-y increases of 53.2%, 70.9% and 10.1% respectively.

NODX to the top 10 markets as a whole grew in January 2021, though domestic exports to the 27 countries in the European Union (EU) post-Brexit, the US and Japan declined.

The increase in the top markets were led by Thailand (+51.5%), South Korea (+49.7%) and Hong Kong (+42.7%).

NODX to emerging markets (EMs) expanded by 43.4% during the month, following December 2020’s increase of 28.3% y-o-y.

The expansion was mainly due to Cambodia, Laos, Myanmar and Vietnam (+235.3%), Latin America (+23.6%) and South Asia (+12.7%).

Non-oil re-exports (NORX) grew by 8.8% y-o-y in January, following the 5.4% growth in December 2020. The growth in electronic re-exports outweighed the decline in non-electronics.

Oil domestic exports contracted by 37.8% y-o-y in January amid lower oil prices, deepening December’s decline at 19.3%.

On a seasonally adjusted m-o-m basis, oil domestic exports grew by 6.2%.

Total trade fell 1.9% y-o-y in January to $86.6 billion, following the 0.3% decrease in December 2020. This was mainly due to the oil trade, which continued to decrease at 34% y-o-y or $5.9 billion lower y-o-y.

Total exports grew by 1.1% y-o-y while total imports fell by 5.2% y-o-y.

"The strong performance in January’s NODX reinforces our view for an optimistic external environment for Singapore. Into 2021, the global economy is expected to recover further from the recession seen in 2020," says UOB economist Barnabas Gan.

"This will likely support global export demand, and with it, drive economic performance for export-oriented economies such as Singapore. Separately, rising oil prices where Brent Crude rose to US$62.80 ($83.18) per barrel as at the time of writing, versus 2020’s low of US$19.33 per barrel in April 2020, may underpin petrochemical exports (Dec 2020: +11.5% y-o-y, Jan 2021: +10.1% y-o-y)," he adds.

To Gan, the improving backdrop of the global economy and rising oil prices are "strong drivers" to lift Singapore's export momentum in 2021.

"This suggests that shipments in products that had been weak (such as chemicals, petrochemicals, and assembled PCBs) may turn positive in the year ahead. Still, there are pronounced uncertainties regarding how Covid-19 may evolve, which may quickly dissipate the optimism felt to-date. As such, we remain cautiously optimistic that NODX will expand by 1.0% in 2021, against Enterprise Singapore’s outlook of between 0 and 2%," he says.

CGS-CIMB Research economists Michelle Chia and Lim Yee Ping are also positive on the month's figures, as it came above the brokerage's and consensus' estimates.

"We expect Singapore’s exports to be supported by strong demand and order backlogs in the electronics sector, improving appetite for capital goods and machinery upgrades, tightening supply in global petroleum products and petrochemical markets as well as upside potential in pharmaceuticals from Singapore’s role as a vaccine distribution hub for the region. We estimate Singapore’s NODX to rise 6.9% in 2021, with merchandise exports playing an important role in helping the economy meet our GDP forecast of +5.3% in 2021," they write in a Feb 17 report.

JP Morgan's head of Asean economic research Sin Beng Ong foresees the underlying recovery in goods demand to continue given the expected recovery happening in the rest of the world.

"That said, it remains to be seen how much marginal demand US stimulus might add to goods given the different starting positions of goods and services. In a scenario where the demand lift is biased towards services, this would suggest a weaker impulse on the region. Another important development for the region will be the impact of the fiscal changes on capital equipment spending," he says.

On the continued decline of oil imports, Oxford Economics' economist Sung Eun Jung suggests oil exports will remain weak in the short term.

Looking ahead, Sung says she expects an "improved external outlook, supported by stronger growth in China and the US this year".

"Accordingly, we have upgraded our 2021 GDP growth forecast for Singapore by 0.4 percentage points to 6%. However, Covid-related uncertainties remain large over the pace of vaccine rollout globally and the timing of relaxing mobility restrictions," she adds.

Maybank analysts Chua Hak Bin and Lee Ju Ye say they expect NODX to ease from its pace of 4.3% in 2020 to 3% and 4% in 2021. The forecasted figures are higher than the 0% to 2% range forecasted by Enterprise Singapore (ESG).

"We remain positive on the exports outlook in 2021 as global trade recovers with more countries returning to pre-pandemic activity levels. Manufacturing PMI remains strong in most countries in Jan 2021, especially the US, Taiwan and South Korea. Singapore’s chip exports and production will continue to benefit on demand from 5G, data centres and automotives," they note.

"We forecast GDP to recover by +4.5% in 2021, and expect the Monetary Authority of Singapore (MAS) to maintain its current S$NEER neutral stance at the April meeting," they add.

RHB Group Research's Singapore research team says it maintains its GDP forecast at 5.5% y-o-y, same as consensus' and Bloomberg's estimates.

"We expect momentum for growth in exports to remain in the positive for 1H21, barring tighter border restrictions in major markets due to further widespread resurgence in new infections," says the team.

Echoing the views from Maybank's Chua and Lee, the team at RHB says the S$NEER "will remain at a 0% appreciation path at the upcoming MAS April 2021 policy review".

"Given the recovery path that the city-state is now embarking on, we expect MAS to continue with this accommodative stance in support for the gradual pick-up in economic activities," it adds.

On the export figures, RHB's team of analysts says it expects growth in exports to be "propped up by resilient global semiconductor demand, which will give the electronics sector the continued boost in growth for 1Q2021".

"The machinery and equipment segment under the non-electronics sector should also benefit from the demand from semiconductors. As such, this segment, which accounts to almost 50% of total non-electronics exports, should support growth momentum in the non-electronics sector. Moreover, PMI for manufacturing and electronics have expanded to 50.7 and 51.0 respectively in January 2021. This indicates healthy production demand for manufacturing and electronics products, which also reflects well for exports performance."