Why a slight disappointment is on the cards for Singapore's March NODX

Growth predicted to dip 2.3%.

According to DBS, slight disappointment is on the cards for March non-oil domestic export (NODX) figure due on Thursday morning.

Market is looking for a marginal 0.5% YoY rise but DBS reckons that the final outcome could be disappointing. A contraction of 2.3% YoY has been penciled into its forecast and this is down sharply from a robust growth of 9.1% in the previous month.

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Note February’s solid showing is also the strongest pace of NODX expansion since Mar11. The low base in Feb13 has helped to provide some technical lift but March will be the time when things will fall back to reality.Global outlook is improving.

But the progress has been slow. While there is no significant downside risk in the horizon, strong external impetus has been lacking too. The outlook for NODX will more likely run sideways in the coming months than having a clear upward or downward trend. And this is probably the same path that the economy may take in the coming quarters.

Moreover, the performance of the economy, including NODX, is also hampered by the on-going restructuring and manpower crunch. This will last for a while and external competitiveness of the economy has been impacted. Export performance in the medium term will continue to languish and GDP growth will at best stay at the potential growth rate of 4% even if global demand accelerates.

This is the pain of restructuring and it remains to be seen whether it will become a too hefty price to pay going forward.