Singapore NODX predicted to register 7% growth in 2014

But here's the flip side.

According to UOB Economic-Treasury Research, it expects NODX growth of 7% in 2014, significantly higher than the trade agency’s forecast of 1% – 3%. To put things in perspective, our forecast implies only a 0.6% growth compared to a ‘normal’ year in 2012.

Here's more:

In December 2013, Singapore’s non-oil domestic exports (NODX) expanded by 6.0% y/y, turning around from the 8.9% contraction a month ago.

This was better than consensus expectation of a 1% expansion, but lower than our 7.5% forecast. On a seasonally-adjusted basis m/m basis, NODX grew 9.2% in December, following 4.2% contraction in the previous month.

We expect the share of output/exports in the PC-related clusters to decline in the years ahead. Nonetheless, the pickup in demand in smartphone/tablet products will benefit Singapore’s semiconductor and other related industries.

We are particularly encouraged by the economic recovery seen in the G3 economies, which will lead to positive spillovers to Singapore’s export demand in 2014.

Recent high frequency indicators showed that the US purchasing managers’ index had been trending up (latest 57.0 in December).

Given the expansion in the US Semi book-to-bill ratio (1.11 in November), better US consumer confidence and US capacity utilization, recovering PMI numbers in the Eurozone, Japan, and China, and the low base seen in NODX in 2013, we are optimistic these will translate into support for a more buoyant NODX growth this year.