Quick Takes: Singapore NODX's surprise rise in Dec 2014

INTERNATIONAL Enterprise Singapore said on Friday morning that Singapore's non-oil domestic exports grew 2.3 per cent year-on-year in December, surprising the market, which had been expecting a 2.2 per cent contraction.

The jump was supported by a turnaround in electronic shipments, and meant that for the full year of 2014, NODX contracted a milder 0.7 per cent than the government's estimate of a 1-1.5 per cent contraction.

Here's what economists had to say about the news:

Chua Hak Bin, Bank of America Merrill Lynch economist, cautioned that the outlook is not cloudless yet: "Despite the better-than-expected NODX print in December, the outlook remains far from rosy. Intensity of import demand in several major export destinations like the EU, Japan and China remains sluggish.

"In fact, NODX to these three countries contracted in the fourth quarter. Singapore is also not yet benefiting from stronger growth in the US, with NODX to the US slipping to a 6 per cent year-on-year contraction in Q4, versus 4.8 per cent growth in Q3. Shipments to destinations closer to home (Malaysia, Thailand) are, however, doing better."

UOB economist Alvin Liew agreed, pointing out that the outlook for electronics and petrochemicals remains uncertain: "Going into 2015, uncertainty about the global growth outlook on the back of rising domestic costs will likely continue to weigh down on Singapore's trade prospects. The turnaround in electronics may easily falter and resume its decline while petrochemicals could remain under pressure with the oil price weakness persisting at least in Q1 2015. We expect NODX to decline further by one to 2 per cent in 2015."

ANZ economists Daniel Wilson and Glenn Maguire, on what this means for the wider Singapore economy and monetary policy: "The weaker tone in high frequency economic data reinforces our view that supply side adjustments are blunting growth in certain sectors. The disinflationary impulse is also intensifying with further declines in commodity prices suggesting inflation could indeed undershoot the Monetary Authority of Singapore's expectations, providing opportunity to return to a more neutral monetary policy stance next April."