Sharp NODX pullback on the cards after two months of growth

Highly volatile segments drove the expansion.

Singapore's non-oil domestic exports (NODX) is in for a sharp pullback after two consecutive months of expansion.

HSBC economist Joseph Incalcaterra noted in a report that the unexpected growth has been fuelled by highly volatile components such as pharmaceuticals and marine engineering.

"To us, it is fair to assume that the highly volatile components of NODX that have fuelled much of the y-o-y growth over the past two months - pharmaceuticals and marine engineering - will see a relatively strong negative sequential reading in the months ahead. However, the low base effect from last year should prevent y-o-y readings from falling too low," he stated.

Although a pullback is on the cards, Incalcaterra noted that the positive NODX still injects hope into the republic’s growth prospects.

“With the second consecutive upside surprise in NODX, Singapore is bucking the regional trend of disappointing export data seen in most other Asian countries. Overall, the better than expected NODX data imply that growth may hold up better than expected in 2Q, and that the economy will move past the sequential contraction in manufacturing growth in 1Q," Incalcaterra said.