SINGAPORE’S key exports in August continued the previous month’s rally on the back of a surge in electronics shipments, albeit at a slower pace than analysts were expecting.
Non-oil domestic exports (NODX) rose by 10.7 per cent year on year (yoy) in August, extending the surprise 15.7 per cent jump in the previous month, data from Enterprise Singapore (EnterpriseSG) showed on Tuesday (Sep 17).
Following July’s upbeat performance, private-sector economists polled by Bloomberg had projected a 15 per cent year-on-year jump in August.
“Although July’s stellar performance was almost certainly not going to be repeated, August’s decline was slightly larger than anticipated,” said Sheana Yue, economist at Oxford Economics. “Exports growth is set to remain modest, given few tailwinds driving global demand outside of tech.”
On a seasonally adjusted monthly basis, NODX fell by 4.7 per cent – a sharp slowdown from the previous month’s 12.2 per cent expansion – to S$14.7 billion in August.
Shipments of electronic products surged 35.1 per cent yoy in August, accelerating from the previous month’s 16.8 per cent jump. This was driven largely by the exports of integrated circuits and disk media products, EnterpriseSG said.
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Analysts said the good showing was consistent with electronics’ recovery momentum globally but were nonetheless cheered by the large jump.
“We expect the export rebound to be sustained, as electronics demand strengthens on the back of semiconductors,” said Maybank economists Chua Hak Bin and Brian Lee, adding that demand is “broadening beyond” advanced-node chips optimised for artificial intelligence (AI).
Noting that electronics exports had grown at its fastest pace since mid-2010, DBS economist Chua Han Teng said he expects the recovery in electronics exports to be a key driver of the overall NODX upturn.
Non-electronic shipments grew a more modest 3.7 per cent yoy in the same period, easing considerably from the 15.5 per cent growth in the previous month. The expansion was mostly led by specialised machinery and non-monetary gold, while pharmaceuticals proved to be the main drag with a 31.6 per cent contraction.
However, RHB acting group chief economist Barnabas Gan believes the slowdown in pharmaceutical exports is temporary, considering its typically volatile nature and the fact that several big pharma firms have made large investments to expand their operations in Singapore.
NODX grew for eight out of Singapore’s top 10 markets, with the eurozone and Japan bucking the trend. This is compared with six in July.
Exports to Hong Kong clocked the most dramatic improvement with a 70.6 per cent year-on-year surge, turning around from July’s 3.3 per cent contraction. The authorities attributed the growth to integrated circuits, non-monetary gold and disk media products.
NODX to China, Malaysia, the US, Indonesia and Thailand eased compared with the previous month, even as growth remained positive.
Shipments to China rose 18.8 per cent yoy in August, compared with 21.1 per cent previously, while those bound for the US were up 6.4 per cent yoy, slowing down from 28.9 per cent in July.
In contrast, exports to Japan shrank 29.6 per cent yoy in August, deepening from the previous month’s 7.9 per cent contraction. NODX to the eurozone was also down 20.9 per cent yoy, extending the 4.7 per cent contraction in July.
Overall, total trade grew 3.1 per cent yoy in August, easing from the previous month’s 13.6 per cent expansion. Sequentially, however, total trade shrank by 2.8 per cent, reversing from July’s 3.1 per cent growth.
Economists said they remain cautious about Singapore’s exports outlook, considering the uncertain geopolitical climate and other tailwinds.
“While there are latest smartphone launches including the iPhone 16 and the Huawei Mate XT for instance, the external landscape remains complicated by the upcoming US presidential elections, the ongoing soft patch in China and heightened geopolitical tensions,” said OCBC chief economist Selena Ling.
She noted that NODX year to date has shrunk 0.6 per cent, which is an improvement over the 16.5 per cent contraction over the same period last year.
This means NODX would have to average more than 13 per cent yoy for the last four months of 2024 to reach the lower end of EnterpriseSG’s forecast range of 4 to 5 per cent growth.
“One silver lining is that the global monetary policy easing cycle has started – pending the first FOMC (Federal Open Market Committee) rate cut later this week,” Ling said.
However, the lagged impact of changes to monetary policy means loosening in key export destinations such as the US and eurozone will take some time to feed through, said Yue from Oxford Economics. Meanwhile, higher freight rates are another drag on consumer demand, she added.
