What the 30.6% NODX plunge could mean for Singapore GDP

It's not a very pretty picture.

According to Nomura, non-oil domestic exports (NODX) plunged 30.6% in February, far worse than expectations (Consensus: -16.0%; Nomura: -19.2%). 

Base effects played a role given that NODX last year was at its highest in February in nominal dollar terms – but that is only part of the story.

On a sequential seasonally adjusted basis, NODX fell another 2.4% m-o-m after falling by 1.8% in January.

Here's more from Nomura:

Weakness was seen across the board, but most notably in key items: electronics (-27.4% y-o-y), pharmaceuticals (-22.9%), and structures of ships & boats (-99.4%).

By destination, NODX worsened sharply in every major market led by the US (-52.1%), EU (-52.2%) and China (-10.6%), despite better-than-expected data in the US.

Our view has been that NODX will be volatile but we were still surprised by how extreme and broad-based the decline in February was.

There is still a case to expect some pickup in the near term as base effects fade, pharmaceuticals swing the other way, and oil rig shipments come through. However, the underlying improvement we forecast in H2 is increasingly under threat.

Taking the latest data into account, our monthly GDP tracker suggests very weak growth of -3.0% y-o-y for Q1 so far (verus +1.2% in the previous quarter).

Unless there is a sharp rebound in the March indicators, the risk is that this could put more pressure on the authorities to provide some form of short-term support and ease policy, which puts the spotlight back on the next MAS policy announcement in April.