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SINGAPORE'S trade agency is raising its full-year forecast for non-oil domestic exports (NODX) after the trade benchmark grew at a faster 7.6 per cent year-on-year pace in the third quarter of 2017.
IE Singapore now expects NODX to expand by 6.5 per cent to 7.0 per cent in 2017, up from a forecast of 5 per cent to 6 per cent provided in August. If the forecast comes true, NODX will grow in 2017 at a faster rate than in at least seven years. Between 2011 and 2016, the fastest growth in NODX was 2.2 per cent, in 2011, according to data from the Department of Statistics.
The third-quarter year-on-year growth was an improvement from the 3.0 per cent rate in the second quarter. On a quarter-on-quarter seasonally adjusted basis, however, NODX slipped 3.0 per cent in the third quarter following a 3.7 per cent decline in the second quarter.
Domestic exports of electronic products rose at a slower pace in the third quarter, growing 8.9 per cent compared to the 13.7 per cent surge in the second quarter. Integrated circuits remained a key driver for electronic exports, growing 20.8 per cent in the third quarter, albeit at a slower clip than the 26.0 per cent pace in the preceding three months.
Domestic exports of non-electronic products picked up, rising 7.0 per cent year-on-year in the third quarter, up from the 0.9 per cent decline in the second quarter. Specialised machinery, up 46.4 per cent during the quarter, was a key contributor to the growth.
Total merchandise trade increased by 11.7 per cent in the third quarter, up from the 9.5 per cent rate in the second quarter. For the full year, IE Singapore now expects growth of 10.0 per cent to 10.5 per cent, up from the earlier forecast of 6 per cent to 7 per cent.
Higher oil prices from year-ago levels helped to lift oil trade by 22.1 per cent in the third quarter, although the rate was slower than the 27.7 per cent improvement in the second quarter. Non-oil trade rose 9.6 per cent in the third quarter, up from the second-quarter 5.9 per cent increase.
The stronger than expected year-to-date export growth helped to inform the more bullish official forecast.
IE Singapore also noted that the global economic and trade outlook had strengthened since August. For instance, the International Monetary Fund's world economic growth forecast was raised by 0.1 percentage point for 2017, to 3.6 per cent; and for 2018, to 3.7 per cent.
The World Trade Organization's 2017 estimate for world merchandise trade volume has also been upgraded to 3.6 per cent from the previous 2.4 per cent outlook.
NODX to all top markets rose in the third quarter, except to the EU28 bloc of countries in the European union. Year to date, China remains Singapore's top NODX market, growing 34.6 per cent in the first nine months of the year against the year-ago period.