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Singapore's NODX drops after three consecutive months of growth

Amala Balakrishner
Amala Balakrishner6/17/2020 10:29 AM GMT+08  • 4 min read
Singapore's NODX drops after three consecutive months of growth
SINGAPORE (June 17): The effects of the Covid-19 pandemic are weighing in on Singapore’s non-oil domestic exports (NODX) as the metric reversed into the red in May, after posting expansions in the preceding three months.
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SINGAPORE (June 17): The effects of the Covid-19 pandemic are weighing in on Singapore’s non-oil domestic exports (NODX) as the metric reversed into the red in May, after posting expansions in the preceding three months.

Official figures released by trade agency Enterprise Singapore (ESG) on Wednesday pointed to a 4.5% y-o-y contraction in May, compared to a 9.7% growth logged in April.

Singapore's latest export figures falls short of the 1% growth forecast by market watchers.

Specifically, the decline was led by an 8.8% contraction in non-electronic products, a significant deviation from the 12.8% growth logged by the segment in April. This comes on the back of tumbling exports of petrochemicals (-31.2%), food preparations (-24.5%) and non-electric engines and motors (-55.0%)

Meanwhile, electronic exports surged 12.5% in May, rebounding from the 0.6% dip posted in April. The improved performance follows expansions in the exports of ICs, disk media products and disk drives by 22.5%, 51.5% and 23.6% respectively. Collectively, the growth of the segment cushioned the extent of the decline to May’s NODX.

On a month-on-month seasonally adjusted basis, NODX was also down 4.5%, narrowing from the 5.1% decline posted in the previous month. This is as “the decrease in non-electronic exports outweighed the growth in electronics,” ESG explains. As such, May’s NODX came in at $14.2 billion, down from April’s $14.9 billion.

Even so, Singapore’s NODX to its top 10 markets grew in May, with exports to the US (+50.6%), Japan (+52.9%), Taiwan (+27.2%) and South Korea (+24.2%) leading the way.

Interestingly, the growth in NODX to the US, narrowed from April’s 124.0% expansion and comes from heightened exports of non-monetary gold, disk media products (+179.2%) and silver platinum metal (+619.6%).

Similarly, the growth in NODX to Japan edged down from the previous month’s 81.1% expansion and follows higher shipments of pharmaceuticals (+192.1%), specialised machinery (+93.8%) and PCs (+33.5%).

On the contrary, NODX to Indonesia (-34.9%), EU 27 (-28.6%), Malaysia (-9.1%), Hong Kong (-7.2%) and China (-7.0%) staged declines, possibly due to the movement control restrictions from Covid-19.

Meanwhile, May saw a 15.9% contraction in non-oil re-exports (NORX), extending the 8.4% decrease posted in April. This follows declines in both electronic (-3.8%) and non-electronic (-(-27.1%) re-exports, the trade agency pointed out.

In this time, NORX to the top 10 markets declined, with the top contributors being Malaysia (-21.2%), South Korea (-26.0%) and China (-9.5%).

Overall, total trade was down 25.0% in May, deepening the 12.9% contraction registered the previous month. Total exports plummeted 23.9%, from March’s 12.7% decrease – recording its deepest contraction since March 2016. Similarly, total imports was down 26.2%, widening its 13.1% decline in April.

Selena Ling, Head of Treasury and strategy at OCBC Bank calls this “a two steps forward, one step back story”. This is, as the fall in NODX is “unexpected” and “disappointed both market estimates and our expectations,” she elaborates.

Looking ahead, she says “June NODX could snap back again with the re-opening of the Singapore economy and other lockdowns being lifted globally – including in key markets like US, Japan [and] Malaysia”.

In this time, Ling believes pharmaceutical exports should still be well demanded amid concerns of a second wave of Covid-19 infections and recent news of vaccine developments. UOB economist Barnabas Gan agrees, noting that Singapore has contributed US$13.0 million ($18.1 million) towards international efforts to combat Covid-19.

"Locally-produced range of serological and nucleic acid-based diagnostic tests have already been deployed to over 20 countries. Singapore is also expected to build up its vaccine manufacturing capacity, and eventually offer contract manufacturing services to vaccine developers," he adds.

Still, Ling cautions that the re-emergence of cases in Beijing and elsewhere “may imply that the 2nd half recovery trajectory may not be linear as consumer confidence and demand may remain subdued”.

“Overall, there are still risks on both sides - the earlier transition to Phase 2 for Singapore with more economic engines restarting is definitely a positive development, but the ongoing US-China trade and tech war may complicate the picture in addition to the evolving pandemic situation,” she adds.

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