Chart of the Day: Why analysts are itching to witness an uptrend in NODX

The GDP badly needs a pick-me-up.

While everyone was devastated with Singapore's latest NODX data, analysts were getting more and more frustrated at how things are getting worse for the economy.

According to Macquarie Research, Singapore 1Q14 GDP was strong at +4.9%, inflation is moderating slightly, and the gap between wage increases and productivity gains continues to narrow. 

Here's more from Macquarie Research:

But other macro indicators have been underwhelming, including NODX (-2%), retail sales (flat) and visitor arrivals (also flat).

NODX should improve as it is closely correlated to global semiconductor shipments which have been growing at an accelerating pace this year, a trend our tech team expects to continue.

NODX is also correlated to global trade which has been growing at an average 2.6% year to date. Sustained recovery in NODX is key, as Singapore GDP is closely correlated to it.

Singapore’s fortunes are most tied to North Asia / ASEAN where the evolution of expectations has been mixed as per above, but still generally positive. We also track the OECD Asia Leading Indicator (LI), to which the FSSTI is positively correlated.

The LI stalled in “Downturn” territory for most of this year before showing a Recovery signal in April’s latest reading. The FSSTI is also positively correlated to the 10-year US bond yield (BY). Again the picture is mixed: BY increases have come in lower than expected, but our team still expects them to increase over time