Quick takes: Singapore non-oil exports growth up 8.5% in July

NON-OIL domestic exports (NODX) growth rose 8.5 per cent year on year in July, extending the 8.8 per cent growth in June, according to trade promotion agency International Enterprise (IE) Singapore.

Here are some comments from economists:

UOB Bank economist Francis Tan:

"Today's release of July NODX provided a second month of data support which validates our view and we still maintain our positive outlook on the overall NODX expansion for 2017, supported by continued growth in electronics exports. However, we do not expect (that) the strong double-digit NODX growth since November 2016 can be sustained into the second half of 2017. This is especially since the current electronics cycle may be coming towards an end with the rolling out of the next wave of smartphones likely in H2 2017.

"Moreover, recent slowing growth and expected slower growth in China (Singapore's largest exporting country) may pose some risks to Singapore's NODX growth in the months ahead. The Singapore Ministry of Trade and Industry had warned in its latest Q2 2017 GDP (gross domestic product) report that real investments in China are likely to see a modest slowdown over the course of the year. Higher frequency leading indicators such as the Purchasing Managers' Indices of various countries in Asia released earlier this month also points mainly to a slowdown in manufacturing."

Citibank economist Kit Wei Zheng:

"July's NODX was slightly below expectations at 8.5 per cent year on year (y-o-y) and -2.5 per cent month on month (m-o-m) seasonally-adjusted. (Consensus was 9.1 per cent y-o-y and -0.4 per cent m-o-m seasonally adjusted.)

"External demand remains supportive of growth in early H2 2017. With today's slight downside surprise in NODX largely attributable to the volatile pharmaceutical sector, we are not overly concerned. Excluding pharmaceutical, the data is consistent with our view that external demand will continue to support overall growth, though momentum may moderate...

"The key uncertainty into H2 2017 remains whether the export recovery spills over into domestic demand. Thus far, monthly data points to tentative, but uneven signs of a bottom. With both growth and inflation in line with the Monetary Authority of Singapore's (MAS) implicit assumptions in April, we continue to see MAS standing pat in October, but policy normalisation is probably a matter of 'when', not 'if', with 2018 our base case."

OCBC Bank economist Barnabas Gan:

"In all, Singapore's NODX grew by a strong 9.1 per cent in the first seven months of 2017, marking the fastest growth over the same period since 2010. Note that IE Singapore had previously narrowed its 2017 NODX forecast from 4-6 per cent to 5-6 per cent earlier this month, citing the upgrades in growth forecasts for key trading partners as reasons for the more positive trade outlook...

"Given that Singapore's growth is heavily reliant on its trade performance, the strong exports seen year to date continues to paint a rosy external environment for Singapore's economy... Looking ahead, Singapore's growth outlook should continue to be underpinned by its rosy external environment outlook. Barring further negative surprises coming out from the global geopolitical arena and uncertainties in the US political space, we look for Singapore's NODX growth to clock a full-year print of 7.4 per cent - slightly higher versus (the) official forecast of 5-6 per cent."