Non-oil domestic export sales up by 7.6% in May

Outlook has not changed significantly even with this so called “rebound”. Export sales were down by 1.8% YoY and 3.6% MoM sa in April on the back of the calamity in Japan causing electronics supply chain disruption. Expectation is for sales to remain fairly flat on a sequential basis compared to the previous month. Nonetheless, we believe this drag from Japan is likely to be transient and an improvement can be expected from July onwards when reconstruction work begins.

Separately, the high oil prices have taken a toll on global economic activity and consequently impacting Singapore’s export performance. Note that oil prices was above USD120/bbl for most part of April. That said, being a regional petrochemical refinery centre, Singapore exports quite a fair bit of petroleum products. High oil
prices essentially have added some positive price effect to headline nominal export sales. In contrary, a strong Sing dollar in April probably explains part of the decline in April exports. Sing dollar appreciated by about 3% against the greenback in April but has retreated about 1.2% in May. Indeed, part of the improvement in NODX growth in May can be attributed to weaker Sing dollar.

Going forward, while monetary tightening across Asia is gradually cooling regional consumer demand, the good news is that regional economic fundamentals have remained strong. Moreover, some regional central banks have intentionally stayed behind the curve in their monetary policies, preferring to sustain the current growth
momentum. Juxtapose these with a steady recovery in the US driven by a resilient consumption growth, export sales should start to creep up in the second half of the year.