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Singapore NODX falls 4.5% in May on decline in non-electronics exports

Non-oil domestic exports (NODX) in Singapore finally succumbed to the Covid-19 pandemic to post a 4.5 per cent drop year on year in May, after four straight months of growth.

DOMESTIC electronics exports are usually the culprit, but this time, the knock-out punch came from non-electronic shipments, which brought Singapore’s key non-oil domestic exports (NODX) down 4.5 per cent in May – the NODX’s first monthly drop this year.

Month on month, the NODX also fell by a seasonally-adjusted 4.5 per cent last month, going by the latest trade figures released on Wednesday by trade promotion agency Enterprise Singapore.

After four straight months of year-on-year growth, up 9.7 per cent in April alone, the NODX has finally succumbed to the fallout of the Covid-19 pandemic, which has virtually shut down the global economy and movement of people and goods.

Still, things may not worsen for the NODX going forward, as the lockdowns imposed to stop the virus from spreading are eased in the coming months, private-sector economists have said.

Economists at Maybank Kim Eng said in a brief report: “Exports may (already) be bottoming out as more countries gradually reopen their economies.”  OCBC’s Selena Ling added: “June NODX could snap back again with the re-opening of the Singapore economy and other lockdowns being lifted globally.”

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UOB’s Barnabas Gan sees an uptick in pharmaceuticals exports in the next six months, thanks to low-base effects. “This, coupled with an increased demand for medical goods during the Covid-19 pandemic, suggests that pharmaceutical-related exports will stay as the growth lynchpin for non-electronic NODX.” 

Nevertheless, the economists warned that much is still unknown about Covid-19, and that it remains a menace. OCBC’s Ms Ling pointed to troubling signs in the re-emergence of cases in Beijing and other spots.

And Mr Gan noted the resurfacing of US-China trade tensions, which is also clouding the NODX’s growth prospects.

With all these red flags, Ms Ling said a “second-half recovery trajectory may not be linear as consumer confidence and demand may remain subdued”.

Meanwhile, the Maybank Kim Eng economists said that the global lockdowns appear to have been a boon to Singapore’s domestic electronics shipments; they have helped lift the electronics NODX up from a 0.6 per cent dip in April to growth of 12.5 per cent last month – with most of the growth coming from integrated circuits (+22.5 per cent), disk media products (+51.5 per cent) and disk drives (+23.6 per cent).

The economists said: “Electronics exports are benefiting from work-from-home policies as companies depend more on technology to overcome lockdowns. Singapore’s strong electronics performance is consistent with other tech powerhouses such as South Korea and Taiwan.”

Yet, electronics NODX’s recovery was not enough to offset the 8.8 per cent plunge in domestic non-electronic exports last month, which was weighed down mainly by lower shipments in petrochemicals (-31 per cent), food preparations (-25 per cent) and non-electric engines and motors (-55 per cent).

The strong showing of pharmaceuticals exports in the preceding three months was cut short in May, as the effect of a high base year kicked in to reduce exports by 7.0 per cent, against a 174.3 per cent jump in April.

NODX exports to Singapore’s top 10 markets increased as a whole in May, said Enterprise Singapore, with strong strong shipments to the US (+50.6 per cent), Japan (+52.9  per cent) and Taiwan (+27.2 per cent).

In the first five months of 2020, the US overtook China as Singapore’s largest export destination, accounting for 19 per cent of total NODX, compared to 13 per cent for China.

Shipments to the EU, China, Indonesia, Malaysia, Hong Kong and Thailand declined last month.

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