JUST three months after upgrading Singapore’s full-year exports outlook to a range of 4 to 6 per cent, authorities are now bracing for downside risks after weaker-than-expected export levels in the first quarter.
Non-oil domestic exports (NODX) fell 3.4 per cent year on year (yoy) in Q1, a deeper contraction than the 1.4 per cent decrease in the final quarter of 2023, data from Enterprise Singapore (EnterpriseSG) showed on Thursday (May 23).
The agency noted that the contraction was due to the high base from a year ago, and was driven primarily by the typically volatile pharmaceutical exports.
On a seasonally adjusted quarterly basis, NODX fell 4.8 per cent in Q1, swinging from the 7 per cent growth in the previous quarter.
“Given the worse-than-expected Q1 performance, there are downside risks to the NODX forecast, which could come at the lower range of the 4 to 6 per cent forecast,” EnterpriseSG said.
“Nonetheless, support is still expected from the recovery in electronics demand in H2 2024, driven by consumer devices and AI (artificial intelligence) servers, alongside the normalisation of inventory levels,” it added.
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OCBC chief economist Selena Ling reiterated her view that NODX should improve in the second half of the year on the back of an improvement in electronics exports, and also if China’s gross domestic product growth stabilises.
However, she added that hitting the lower end of the official full-year forecast may appear to be “somewhat at risk”, as NODX in the first four months is already at a weaker-than-expected 4.9 per cent contraction yoy.
Shipment of electronic products in Q1 dipped 1.6 per cent yoy, easing from the previous quarter’s 9.9 per cent decline.
Domestic exports of non-electronic products, however, contracted 3.8 per cent yoy, reversing from the 1.1 per cent growth in Q4. This was attributed to a decline in the exports of pharmaceuticals, structures of ships and boats as well as electrical circuit apparatus.
NODX to Singapore’s top markets as a whole declined in Q1, led by falling shipments to the eurozone, US and Japan.
Meanwhile, total merchandise trade rose 4.8 per cent yoy in Q1, reversing from the 2.1 per cent decline in the previous quarter. This is a turnaround after five quarters of decline.
EnterpriseSG said it is expecting higher oil prices in 2024 to support oil trade in nominal terms and, in turn, total trade.
Overall, the agency is keeping its growth forecast range at 4 to 6 per cent for both total merchandise trade and NODX on the basis that Singapore’s key trade partners are projected to grow in 2024, based on estimates by the International Monetary Fund.
