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Quick takes: Disappointing NODX opens door for rollback of GDP expectations

SINGAPORE'S non-oil domestic exports lost steam in September to post a 1.1 per cent decline after months of increase capped by a 16.7 per cent year-on-year (y-o-y) surge in August.

The drop was even more stark month on month (m-o-m), with the NODX plunging by a seasonally adjusted 11 per cent. The NODX was up 4.2 per cent month on month in August. Here are some comments from economists:

OCBC head of Treasury Research & Strategy Selena Ling:

"NODX unexpectedly shrank below our forecast of 12.6 per cent y-o-y (-3.2 per cent m-o-m seasonally adjusted). This marked the first y-o-y contraction since April 2017, and was the lowest since September 2016. While we had expected some NODX retraction in Q4 2017 due to the higher base in Q4 2016, the drop off in NODX momentum admittedly came slightly earlier than expected.

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Market voices on:

"NODX still rose for seven of the top 10 NODX markets with the exceptions of Hong Kong, Thailand and EU28. This does not suggest broad-based weakness across our key NODX markets in September either.

"It remains to be seen if the September NODX data was an anomaly, especially given that Oct16 base is not challenging at -12 per cent y-o-y versus -5 per cent in Sept 2016."

Nomura research analysts Euben Paracuelles, Brian Tan:

"The downside surprise came from electronics export growth which fell to -7.9 per cent y-o-y in September from 20.8 per cent in August, led by integrated circuits. Non-electronics export growth also slowed sharply to 1.9 per cent from 15.0 per cent in August, led by a 36.0 per cent plunge in pharmaceuticals exports, which tend to be volatile, deteriorating further from a 9.1% decline in August.

"Overall, we maintain our full-year 2017 GDP growth forecast of 2.8 per cent, which is similar to the Monetary Authority of Singapore's (MAS) expectations for full-year growth being in the upper half of the official 2-3 per cent forecast range. However, our 2017 GDP growth forecast implies Q4 GDP growth slowing to 1.3 per cent y-o-y from 4.6 per cent in Q3."

DBS Group Research:

"Non-oil domestic exports came in at -1.1 per cent y-o-y in September 2017, down from the 12.7 per cent consensus. August 2017 data was also revised down to 16.7 per cent from 17 per cent originally reported. In turn, this has opened the door for a downward revision in GDP (gross domestic product) growth next month and roll back expectations for a return to a SGD (Singdollar) appreciation policy by the next review in April 2018."

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