Singapore’s key exports on track for recovery despite March’s surprise 20.7% tumble: economists

SINGAPORE’S key exports shrank 20.7 per cent year on year in March, dragged down by declines in the non-electronics sector, data from Enterprise Singapore (EnterpriseSG) showed on Wednesday (Apr 17).

The March figure marked a steeper contraction from February’s 0.2 per cent fall, and was worse than the 7.4 per cent contraction that private-sector economists polled by Bloomberg were expecting. Both electronics and non-electronics exports recorded declines.

Unfavourable base effects exacerbated the steeper-than-expected contraction, said Barclays economist Brian Tan, who estimates that non-oil domestic exports (NODX) would have contracted by just 1.4 per cent in March when the historically volatile and “lumpy” components (such as non-monetary gold and pharmaceuticals) are excluded.

This figure was still dragged down by unfavourable base effects, but was at least more moderate than the headline figure, he added.

On a seasonally adjusted monthly basis, NODX fell 8.4 per cent in March, extending the previous month’s 4.9 per cent contraction.

Maybank economists Chua Hak Bin and Brian Lee said: “The export contraction in March was consistent with the slower-than-expected Ministry of Trade and Industry flash estimate of Q1 gross domestic product, which implied that manufacturing output fell 1.6 per cent in March.

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“The Red Sea tensions may have been a speed bump to the manufacturing and export recovery,” they added.

Recovery still intact

But despite the surprise plunge in March, private-sector economists still expect NODX – in particular electronics – to continue recovering for the rest of 2024.

For one, the latest Purchasing Managers’ Index data suggested that Singapore’s overseas shipments should see better prospects this year than the last, said DBS economist Chua Han Teng.

While electronics NODX recorded a setback, “the ongoing turnaround remains encouraging”, he noted. “We expect Singapore’s electronics shipments to benefit from the gradual improvements in global semiconductor sales as demand and inventory normalises after 2023’s significant digestion.”

Maybank’s Dr Chua and Lee maintained their full-year NODX forecast of between 7 and 9 per cent growth, a tad higher than the official forecast of 4 to 6 per cent.

In February, EnterpriseSG upgraded its full-year forecast for NODX, projecting “modest growth” for the year ahead and a recovery in electronics.

UOB economists Alvin Liew and Jester Koh expect NODX to expand by 6 per cent for the full year, at the upper end of the official forecast.

They said: “In 2024, the recovery will be supported by base effects, given the sharp double-digit year-on-year declines seen in electronics NODX from November 2022 to September 2023, although the sequential recovery could be challenging in the first half of 2024.” This is given the tight financial conditions in the United States and European Union.

Electronics and non-electronics NODX

On a seasonally adjusted basis, key exports’ value reached S$13 billion, down from S$14.2 billion the month prior. It was lower than the year-ago level of S$15.7 billion in March 2023, as well as the 2023 average of S$14.5 billion.

Electronics exports slipped 9.4 per cent in March, reversing the previous month’s 5.2 per cent growth. Telecommunications equipment (-38.8 per cent), integrated circuits (-8 per cent), as well as diodes and transistors (-11 per cent) contributed most to the decline.

Non-electronics shipments shrank 23.2 per cent from the year-ago period, extending the 1.7 per cent decline in February. Contributing most to the drop were pharmaceuticals (-70.3 per cent), structures of ships and boats (-99.8 per cent), as well as non-monetary gold (-49.1 per cent).

NODX to Singapore’s top markets as a whole contracted in March, led by the United States (-50.2 per cent), the European Union (-45.4 per cent) and Japan (-36.5 per cent).

In contrast, exports to top markets such as China (11.9 per cent), Hong Kong (16.5 per cent) and Taiwan (2 per cent) grew. Meanwhile, NODX in all other top markets tracked – Malaysia, South Korea, Thailand and Indonesia – declined.

Overall, total trade fell 1.8 per cent in March, reversing from the 3.5 per cent growth in February. Total exports declined by 3.4 per cent, while total imports decreased by 0.1 per cent. In February, total exports expanded 1.7 per cent, while total imports grew 5.6 per cent.

On a seasonally adjusted monthly basis, however, total trade gained 2.2 per cent in March, turning around from February’s 0.5 per cent decline.

On a seasonally adjusted basis, the level of total trade reached S$106.9 billion, more than the preceding month’s S$104.5 billion. Total exports rose 0.9 per cent, and imports grew 3.7 per cent.