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Exports trounce forecasts with 20.9% jump in October

The figure points to brighter days ahead, but economists are concerned that electronics growth is flagging

"We are a lot more concerned that the growth in electronic NODX has slowed down substantially." - UOB economist Francis Tan


THE party continues for Singapore exporters as shipments rebounded last month after a disappointing showing in September.

Exporters started the last quarter of the year on strong footing as non-oil domestic exports (NODX) surged 20.9 per cent in October over October last year, blowing past economists' estimates of a 11.9 per cent rise.

The figure is the latest in a string of robust numbers pointing to better days ahead for the Singapore economy, thanks largely to a stronger global outlook.

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Still, economists noted that electronics shipments, which have been a key driver of growth this year, could be slowing.

October's robust performance, the strongest pace of growth in eight months, was attributed in part to a low base last year. But it still made up for an unexpected 1.1 per cent dip in September, which came after five straight months of growth.

Electronic exports increased by 4.5 per cent year on year in October, after an 8 per cent decline in the preceding month.

But non-electronics shipments led the pick-up in growth, rising 28.5 per cent from 1.9 per cent in September.

The increase was driven by a seven-fold surge in exports of non-monetary gold - in particular, to China - which reflected a low base in October last year, said trade agency IE Singapore.

Petrochemicals and pharmaceuticals shipments also picked up in October.

UOB economist Francis Tan cautioned that in addition to a low base last year, October's strong NODX numbers were driven mainly by more volatile non-electronics segments.

This means the strong pick-up might not be sustainable.

"We are a lot more concerned that the growth in electronic NODX has slowed down substantially," he noted.

Still, the latest export numbers come as stronger global growth is helping to boost Singapore's manufacturing sector, which makes up a fifth of the economy and has been its brightest spot this year. Two-thirds of manufactured goods are exported.

ING economist Prakash Sakpal said: "We saw from October exports data from Korea and Taiwan signs of the electronics-led exports recovery tapering out in the final quarter of the year.

"Singapore data doesn't support this view, nor does it defy it.

"With the seasonal product replacement cycle for flagship mobile devices coming to end, the NODX growth is likely to ease in the months ahead. Nonetheless, today's data signals a good start to the fourth quarter of the year."

Maybank Kim Eng economist Chua Hak Bin also expects NODX growth to ease in the next two months, largely due to high base effects.

But he remains upbeat on the overall outlook. His forecast is for the economy to expand 3.4 per cent this year - above the government's forecast range of 2 to 3 per cent growth.

"We think services will contribute a greater proportion to growth in 2018, as the recovery broadens from trade and transport and storage to the more domestic-oriented sectors," he said.