SINGAPORE has lowered its full-year exports outlook to a range of 4 to 5 per cent, from 4 to 6 per cent.
Non-oil domestic exports (NODX) fell 6.4 per cent year on year (yoy) in the second quarter, following a 3.4 per cent decrease in Q1, data from Enterprise Singapore (EnterpriseSG) showed on Tuesday (Aug 13).
This was partly due to a high base in the year-ago period, and also driven by a decline in non-electronic NODX during the quarter, primarily due to a fall in pharmaceuticals exports.
Key downside risks remain for the NODX forecast, including a weaker-than-expected recovery in the second half of 2024, said the agency in its quarterly review of trade performance.
However, support for NODX growth is expected from the electronics recovery in H2, with the outlook for total trade remaining “cautiously optimistic with support from high oil prices”, it added.
In particular, “support for NODX is expected to come largely from the electronics recovery, driven by demand in AI (artificial intelligence) servers and consumer devices”.
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The narrowed full-year NODX forecast was “not unexpected”, given that NODX had contracted 4.9 per cent yoy in H1, said OCBC chief economist Selena Ling.
While she anticipates that NODX will stabilise and recover in H2, she added that full-year NODX could come under the 4 per cent mark, particularly with the soft patch in pharmaceuticals.
DBS economist Chua Han Teng expects a “gradual and fragile NODX recovery” in H2, with more favourable base effects in Q3.
“We are also keeping an eye on ongoing uncertainties that could keep Singapore’s exports improvement fragile,” he said.
“One uncertainty is ongoing geopolitical conflicts that could disrupt supply chains, with port congestion already occurring from the rerouting and diversion of vessels from the Red Sea. Another uncertainty is China’s uneven economic growth and the impact on the US economy from high interest rates,” he added.
On a seasonally adjusted quarterly basis, NODX fell 1.3 per cent in Q2, continuing from a 4.8 per cent decline in the previous quarter.
Non-electronics exports declined yoy for the second straight quarter in Q2, while electronics NODX grew for the first time in eight quarters – or since Q3 2022.
Domestic exports of non-electronic products fell by 9.2 per cent yoy in Q2, following a 3.8 per cent decrease in the previous quarter.
The largest contributors to the decline in non-electronic NODX were pharmaceuticals (-50.5 per cent), non-monetary gold (-36.7 per cent) and food preparations (-7.6 per cent).
On a yoy basis, domestic exports of electronic products rose by 3.8 per cent in Q2, after a 1.6 per cent decline in the previous quarter.
Personal computers (58.4 per cent), integrated circuits (7.6 per cent) and other computer peripherals (668 per cent) contributed the most to the growth in electronics NODX, EnterpriseSG said.
NODX to Singapore’s top markets declined as a whole in Q2, due mainly to falls in exports to the US (-20.9 per cent), the eurozone (-28.3 per cent) and Taiwan (-12.8 per cent).
Meanwhile, Singapore’s total merchandise trade expanded by 10.1 per cent yoy in Q2, after growth of 4.8 per cent in the previous quarter.
EnterpriseSG upgraded its growth forecast for total merchandise trade in 2024 to a range of 5 to 6 per cent, from 4 to 6 per cent.
Oil trade expanded 16.9 per cent in Q2, extending the 3.4 per cent growth posted in Q1. Non-oil trade rose 8.5 per cent in the same period, following the previous quarter’s 5.2 per cent rise.
