[SINGAPORE] A front-loading of exports ahead of the US tariffs kicking in may have helped to lift Singapore’s second-quarter economic growth, but the re-export numbers for June suggest that the effect has waned, economists have said.
This is even as Singapore’s non-oil domestic exports (NODX) surged 13 per cent year on year, reversing May’s 3.9 per cent decline, data from Enterprise Singapore (EnterpriseSG) showed on Thursday (Jul 17). The figure surpassed analysts’ expectations of a 5 per cent increase, based on a Bloomberg poll.
Yet, several economists pointed out that non-oil re-exports (NORX) is the more telling indicator this time.
NORX grew 18.5 per cent year on year, extending May’s 16.2 per cent growth, but was still far lower than the 25-year-high rate of 39.3 per cent in April.
On a seasonally adjusted, monthly basis, NORX contracted 5.1 per cent, easing from May’s 19.4 per cent contraction after a record-setting 37.1 per cent surge in April.
“Forget NODX, look at NORX,” Barclays regional economist Brian Tan wrote in a research note on Thursday.
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“The visible pullback in NORX indicates the export front-loading that had boosted Q2 GDP had already waned significantly by June – and is likely on track to experience heavy payback in H2,” he said.
On Monday, Singapore’s Q2 gross domestic product (GDP) outperformed market expectations with 4.3 per cent growth, prompting several economists to upgrade their full-year forecast, even if they expect growth to slow in the second half of 2025.
Tan added that the main driver of Q2’s GDP was not manufacturing – where NODX might be more relevant – but services.
“Specifically, the “wholesale and retail trade and transportation and storage” segment – where NORX is important – was a key driver in Q2,” he said.
NODX performance
As for NODX, several economists noted that non-monetary gold was a key driver in June, having surged 211.9 per cent year on year. In particular, gold exports to China surged 2,222 per cent from the year before, Maybank economists Chua Hak Bin and Brian Lee said.
Without the S$1.3 billion contribution from gold, NODX growth would have been more modest, at 3.4 per cent year on year, they said.
Nonetheless, the upside surprise in June brought NODX growth in H1 to 5.2 per cent year on year.
This means EnterpriseSG may upgrade its full-year forecast from the current “conservative” 1 to 3 per cent range, said the Maybank team, which has upgraded its NODX forecast to 4 per cent, from 1 per cent.
EnterpriseSG said in a footnote earlier that it may release a new forecast in August, and that it is “actively monitoring the evolving tariff situation and will adjust the 2025 NODX forecast as necessary to reflect changing market conditions”.
Out of Singapore’s top 10 markets, only exports to East Asia – Hong Kong, Taiwan, South Korea and China – grew on a year-on-year basis.
DBS’ senior economist Chua Han Teng said: “The resilient growth in electronics exports to these destinations could reflect the positive impact from the front-loading of electronics exports orders flowing through the global supply chain, of which Singapore is an integral part, amid the temporary exemption of US import levies on electronics.”
Sequentially, however, electronics and pharmaceutical exports fell in June, suggesting that the “details are less positive than headlines suggest”, Citi economist Kit Wei Zheng said.
Exports to the euro zone contracted by the largest extent in June, at 23.6 per cent year on year.
Shipments to the US remained weak despite favourable base effects, UOB associate economist Jester Koh noted. They shrank by 4.8 per cent year on year, easing from May’s 20.6 per cent.
The Maybank team said some exports may have been diverted from the European Union during the 90-day reprieve, as manufacturing supply cannot be ramped up quickly to meet import demand.
“Exports to Europe will likely recover and catch up after the US reciprocal tariffs become effective in August. This will help offset and cushion any export slowdown to the US in the second half,” they added.
Payback in H2
Economists expect exports to slow once US President Donald Trump’s reciprocal tariffs for the region kick in on Aug 1.
UOB’s Koh said payback from earlier front-loading is likely to dampen growth in H2, compounded by a potential drag from US reciprocal tariffs affecting other trading partners and Singapore.
He expects this eventual growth “payback” to be more pronounced in trade-related services than in manufacturing.
This is since front-loading seems more apparent in both electronics exports and re-exports and less so in non-electronics exports and manufacturing, he added.
Nevertheless, Sheana Yue, an economist from Oxford Economics, said Singapore could benefit from an established re-exporting sector and a lower reciprocal tariff.
“What’s more, a structural shift in AI-linked electronics demand should continue to be a tailwind,” she said.
