Singapore’s non-oil domestic exports (NODX) increased by 9.5% y-o-y in February, easing from the 17.6% y-o-y growth seen in January.
The expansion was attributable to broad-based growth in both electronics and non-electronics, says Enterprise Singapore (ESG) in a release on March 17.
Despite the growth, the figure disappointed market expectations of a stronger 16.5% growth y-o-y.
"Even as NODX rose for its 15th straight month in February 2022, it has decelerated for three consecutive months, marked the slowest y-o-y growth since August 2021," notes UOB economist Barnabas Gan.
On a seasonally adjusted m-o-m basis, NODX fell by 2.8% to $17.6 billion.
According to Maybank Securities analysts Chua Hak Bin and Lee Ju Ye, the nominal export values were attributable to higher prices as opposed to volumes.
"Real NODX (2018 prices) fell by -2.9% (vs. +2.9% in Jan), the first contraction since August 2021 (see Fig 2), reflecting manufacturing capacity limits and possibly supply disruptions," write the analysts in their note dated March 17.
During the month, electronic exports grew by 11.6% in February, following January’s 14.0% y-o-y rise. Integrated circuits (ICs), disk media products and capacitors contributed the most to the rise, with y-o-y growths of 21.6%, 39.8% and 247.6% respectively.
Non-electronic exports increased by 8.8% in February, easing from January’s 18.6% expansion. The expansion was led by contributions from structures of ships & boats, pharmaceuticals (39.5%) and petrochemicals (19.4%).
NODX to the top 10 markets rose on the whole in February, with the largest contributors being the European Union (EU) 27, China and Malaysia at 53.7%, 19.2% and 29.8% respectively.
NODX to the EU 27 grew thanks to pharmaceuticals (120.8%), specialised machinery (56.8%) and electrical circuit apparatus (216.2%). Meanwhile, NODX to China grew due to pharmaceuticals (199.6%), petrochemicals (14.2%) and measuring instruments (59.4%). NODX to Malaysia grew on the back of exports in ICs (136.3%), specialised machinery (43.5%) and medical apparatus (411.3%).
Conversely, NODX to South Korea, Hong Kong, the US, Thailand and Indonesia declined.
NODX to emerging markets fell by 29.6% in February, after the 21.6% growth in January. The decline was mainly due to CLMV or Cambodia, Laos, Myanmar, and Vietnam at -52.1%, the Caribbean at -73.5% and the Middle East at -20.5%.
In February, non-oil re-exports (NORX) grew by 19.8% due to growth in both electronic and non-electronic products.
On a seasonally adjusted m-o-m basis, NORX increased by 2.4% in February to $31.8 billion.
Electronic NORX rose by 22.7% due to ICs, PCs and diodes & transistors at 35.6%, 66.8% and 14.2% respectively.
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Non-electronic NORX increased by 16.3% due to non-electric engines & motors (58.7%), specialised machinery (44.9%) and electrical machinery (63.8%).
NORX to the top 10 markets as a whole rose in February with the top three contributors being China, Hong Kong and Taiwan at 49.0%, 22.3% and 34.5% respectively.
Oil domestic exports expanded by 62.1% in February thanks to higher exports to Indonesia (76.8%), Australia (129.4%) and the EU 27 (129.9%).
In volume terms, oil domestic exports rose by 5.4% in February, after the 11.0% decline in the previous month.
On a seasonally adjusted m-o-m basis, oil domestic exports grew by 22.2%, from the 9.1% contraction in January.
Total trade in February rose by 21.0% y-o-y and 0.9% m-o-m to $109.0 billion.
During the month, total exports increased by 22.3% y-o-y while total imports grew by 19.6%.
On a m-o-m basis, total exports grew by 3.7%, while total imports fell by 2.2%.
Worry over broader implications from Russia-Ukraine war
While the conflict in Ukraine has yet to dampen Singapore’s NODX to the EU, Maybank’s Chua and Lee say they see headwinds from the ongoing war.
China’s flash lockdowns are another factor for a potential slowdown in Singapore’s NODX growth for the FY2022.
That said, the analysts have kept their NODX growth forecast for the FY2022 at 4% to 6%.
“Russia and Ukraine cumulatively accounted for a negligible share of around 0.4% Singapore’s total trade in 2021. The direct impact of Singapore’s export ban on electronics, computers, and telecom equipment to Russia will not be material,” they write in their note on March 17.
Instead, the analysts are more worried about a broader Europe slowdown or a possible EU recession.
“The EU accounts for a more substantial 9.2% of total NODX. China’s recent flash lockdowns also pose downside risks and may worsen disruptions to manufacturing supply chains.”
In their report, Chua and Lee have raised their year-end three-month SIBOR forecast to 1.8% from 0.98% previously for 2022 and to 2.2% for 2023 on the back of a more aggressive Fed rate hike trajectory.
“The 3M SIBOR rate is currently at 0.63% (as at March 15), having risen by some +20 basis points (bps) since the start of the year. Correspondingly, we raise our three-month SORA forecast to 1.55% (from 0.73%) in 2022 and 1.95% (from 1.27%) in 2023,” they write. “After the +25bps Fed hike, we are expecting the Fed to deliver 6 more rate hikes this year, amounting to a total of +175bps in 2022 and another 3-4 hikes in 2023.”
The analysts from Maybank have also lowered their GDP growth forecast to 2.8% for 2022 from 3.8% previously on the back of lower global and EU growth.
The higher energy prices, manufacturing supply chain disruptions and a more aggressive Fed tightening policy are also other factors in their consideration.
“Our growth forecast sits below [the] Ministry of Transport & Industry’s MTI’s GDP forecast range of 3% to 5%. We expect the government to lower the GDP forecast range sometime over the next few months. Services and construction will be the main growth drivers this year, as manufacturing slows. We expect the Monetary Authority of Singapore (MAS) to tighten again at the April meeting given elevated inflation pressures despite the slower growth outlook,” they write.
UOB’s Gan is also remaining cautious over the potential downside risks surrounding the ongoing geopolitical tensions.
“For that matter, Singapore’s direct trade exposure to Russia is small, where the trade in goods with Russia amounted to $5 billion in 2021 (or 0.4% of Singapore’s total trade),” notes the analyst.
“We are also cognizant that second-order trade impact to Russia’s top trading partners, including China, Europe, US and Japan, may in turn negatively affect Singapore’s trade prognosis. Specifically, Singapore’s exports to China accounted for 14.8% of total exports in 2021, followed by Europe at 9.3%, US at 8.4% and Japan at 4.0% for the above-mentioned period,” he adds.
Closer to home, Gan is more buoyant on the domestic situation, with the country being “well-positioned to ride the endemic Covid-19 recovery into 2022”.
As such, he has kept his full-year NODX growth outlook of 2.0%, at the top end of Enterprise Singapore’s (ESG) range forecast of 0.0% to 2.0% in 2022.
JP Morgan analyst Ong Sin Beng has noted the “encouraging” turn in non-pharma and non-electronics exports, even though February’s NODX stood weaker than expectations.
“We had expected NODX growth to slow in February as manufacturing activity slowed for the same month. Two measures of PMI manufacturing also dipped last month as new orders faded given concerns about geopolitical developments," says ING senior economist Nicholas Mapa.
"With the global growth outlook dimming over the past few weeks, we can expect trade activity to slow further, with NODX likewise expected to see more moderation in the coming months. Positive but slowing NODX expansion will likely sap some growth momentum, which will likely factor into our growth projections for the rest of the year,” he adds.