Singapore exports to cap the year strongly; growth will carry into early 2022: analysts

SINGAPORE'S non-oil domestic exports (NODX) are expected to finish the year strong, with growth momentum carrying over into the next few months as well, analysts said.

That's as exports came in stronger than expected in November, according to figures released by trade agency Enterprise Singapore on Friday (Dec 17).

NODX swelled by 24.2 per cent year on year, up from 17.8 per cent the month before, to set the fastest pace of growth since February 2012.

The latest print shows that the Singapore economy is finishing the year strong and "having by far the fastest recovery in the Asean region", Euben Paracuelles, chief Asean economist at Nomura, told The Business Times. "We expect another solid economic performance in 2022 given the high vaccination rates and border reopening."

Meanwhile, JPMorgan economic and policy analyst Ong Sin Beng observed "a steady external demand backdrop", and added in a research note: "As supply-chain bottlenecks ease, we expect NODX strength to persist in the next few months."

ESG has projected NODX growth to come in at 9.5 per cent to 10 per cent in 2021, for the strongest full-year expansion in a decade. This is then expected to ease to between 0 and 2 per cent in 2022 - although ESG has called the outlook a "cautiously optimistic forecast".

Indeed, Alvin Liew, a senior economist at UOB, noted that NODX rose by 11.4 per cent in the first 11 months of 2021 and "will likely exceed 10 per cent" for the full year.

November's growth came on non-electronics products such as specialised machinery, petrochemicals and primary chemicals, as well as continued expansion in key electronics, such as integrated circuits, amid what ESG called "robust global semiconductor demand".

Electronics NODX rose by 29.2 per cent, compared with 14.9 per cent in the month before, while non-electronics shipments expanded by 22.7 per cent, from 18.8 per cent in the previous month.

"While the favourable base effect may wear off a bit for the upcoming December, the strong momentum for electronics exports could still add to a strong NODX finish for 2021," said Liew.

Jonathan Koh, Asia economist at Standard Chartered, warned in a note that the global electronics cycle may moderate, with DRAM semiconductor prices making a retreat and manufacturing sentiment cooling from earlier in the year.

"The electronics sector's outperformance may have run its course, with demand for electronics normalising as the pandemic ebbs," he wrote in a note. Koh later told BT that the slowdown will take place over the course of 2022, and could weigh on headline NODX growth.

But Paracuelles told BT that the tech cycle should stay robust for at least the first half of 2022, "while global vaccine demand given the need for booster shots should also drive biomed exports higher".

NODX rose year on year to 9 of the Republic's top 10 markets in November, on strong demand from mainland China, Taiwan and South Korea for products such as specialised machinery, petrochemicals, pharmaceuticals and electronics. Thailand was the only key market to see shipments decrease.

Ong noted more subdued growth to markets such as Japan (13.7 per cent), European Union (9.2 per cent) and United States (0.9 per cent) but said it "reflects more a snapback in factory activities across the region to compensate for the disruptions in the third quarter of 2021 and is not so much a signal of weak end-demand".

On a monthly, seasonally adjusted basis, NODX increased by 1.1 per cent in November - against 4.1 per cent before - to S$16.5 billion.

Non-oil re-exports, a proxy for wholesale trade, rose by 20.7 per cent year on year, compared with 17.7 per cent in October. Total trade was up by 31.6 per cent, against 24 per cent previously. ESG attributed the growth to strength in both oil and electronics trade.