Exports growth stymied by ongoing downside risks: UOB

Widespread lockdowns and the Russia-Ukraine war will impact Singapore’s trade exposure.

The full-year growth of non-oil domestic exports (NODX) will be at a muted 2% in 2022, said UOB in a report. Trade exposure could be depressed by the health situation in China as well as worsening of geopolitical tensions, it added in its NODX Outlook report.

Whilst Singapore benefited from the global demand in the first quarter of 2022, there are still downside risks of the Russia-Ukraine conflict and widespread lockdowns in China.

UOB said Singapore’s NODX decreased by 2.3% month-on-month in March 2022, which translated to a weaker 7.7% growth, on a yearly basis, in March 2022 from 9.4% year-on-year expansion in February.

In its previous report, UOB noted that Singapore’s direct trade exposure to Russia is small, with trade in goods with Russia valued at $5b in 2021, or only 0.4% of Singapore’s total trade. 

But the banking company took issue with the potential second-order trade impact to Russia’s top trading partners, including China and Europe, which could have a negative effect on Singapore’s trade outlook.

Also, the lockdowns in China’s key cities will affect China’s domestic demand, which will also impact the Lion City’s exports to China. 

Singapore’s exports to China accounted for 14.8% of total exports in 2021, followed by Europe at 9.3%, the US at 8.4%, and Japan at 4.0%.

Overall, UOB said these factors would likely depress trade demand, especially in Asia, and another round of temporary supply chain disruption due to raw material shortages.