Meaningful H2 recovery underway for Singapore’s NODX: experts

NODX fell 0.1% YoY in May.

Singapore’s non-oil domestic exports (NODX) will likely enjoy a meaningful recovery in the second half of the year following the softer-than-expected slump in May. 

RHB analysts maintained their full-year 2024 growth forecast for NODX at 0.5% on expectations that the country’s manufacturing and trade-related sectors will help support growth in the second half of the year. 

They said global external demand will also likely improve in the coming months.

UOB Associate Economist Jester Koh shared the same view, noting that a “more meaningful recovery” is well underway in H2 as prospects in electronics remain bright. Koh also kept their 4.5% NODX growth forecast for this year unchanged.

“Base effects remain favourable for the months of May-Aug while underlying end-demand fundamentals are intact, driven by the structural boost from generative AI-related applications which has positive spillovers to the consumer segment,” Koh said.

NODX fell 0.1% YoY in May, a softer decline compared to the 9.6% plunge in April and a better print than the market’s expectation of a 1.1% decline. RHB said last month’s dip was mainly due to the shipments in the volatile pharmaceutical cluster and is not indicative of a long-term trend.

RHB said NODX will likely see mild improvement for the rest of the second quarter thanks to an improving Chinese economy as well as the anticipated rebound in global trade and manufacturing activities.

It also expects the electronics sector to lead the recovery after the segment surprised with a 21.9% YoY surge.

“The significant growth in the shipments of electronics sector has further feed into our positive view on the breakdown of electronics sector in Singapore,” RHB said.

“The electronics cluster contributes 47.8%, holding the lion's share of Singapore's manufacturing sector. This sector is expected to benefit from the ongoing upswing in the global tech cycle, which will support electronic production in the coming quarters,” it added.