Export decline not tied to global demand, says expert

Non-oil domestic exports fell 20.7% YoY in March.

The deeper-than-expected decline in Singapore’s non-oil domestic exports in March does not reflect global demand conditions, said RHB Group Chief Economist Barnabas Gan, citing three factors.

“First, Singapore’s total exports accelerated in March, highlighting higher oil outbound shipments. The relatively higher sequential growth in total exports also translated to a trade surplus of $5.5m in the same month, thus underlining further growth tailwinds,” Gan said. 

Gan added that the decline in Singapore’s NODX was due to a “shortfall in shipments in volatile components,” especially pharmaceutical exports which saw a 70.3% YoY drop. 

“NODX was also dragged by non-monetary gold, which further adds to the lack of relevancy between today’s relatively lacklustre shipments and Singapore’s overall growth dynamics,” Gan said.

Lastly, the RHB expert underscored the high base year in March 2023 NODX, which contributed to a higher hurdle from a YoY growth perspective.

Still, given the weaker NODX print, RHB has cut its annual NODX forecast to 0.5% from 3.0%.

UOB, on the other hand, projects a 6.0% NODX growth this year, adding that recovery will be supported by base effects given the sharp double-digit year-on-year declines seen in electronics NODX from November 2022 to September 2023.”

UOB, however, underscored that “sequential recovery could be challenging in 1H24 given tight financial conditions in the US and EU.”

Nomura, for its part, believes that the decline in electronic exports in March should be short-lived.