Singapore non-oil exports in March jump 17.6% partially due to 'low base'

SINGAPORE'S exports grew by a surprising 17.6 per cent in March, extending February's gains, amid a weak outlook brought on by the Covid-19 pandemic, according to data from Enterprise Singapore (ESG) on Friday.

The jump in non-oil domestic exports (NODX) in March has dramatically exceeded private-sector economists' expectations. They had predicted a contraction of 8 per cent, according to a Bloomberg poll.

In comparison, February's NODX saw more modest gains at 3.1 per cent, which also came as a surprise to economists at that time.

However, ESG noted that March's performance is due to the low base a year ago. In March 2019, NODX slumped 11.7 per cent year on year, logging the biggest drop in more than two years, amid a trade war between the United States and China.

But Barclays economist Brian Tan said this low-base effect is a partial reason, given that NODX jumped 12.8 per cent month on month after seasonal adjustment despite the pandemic. He added that this more than reverses the 4.7 per cent drop in February.

Both electronic and non-electronic exports increased in March, with the latter seeing a surge of 20.5 per cent.

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Non-monetary gold exports shot up by 242.5 per cent, while that for specialised machinery and pharmaceuticals expanded by 54.2 per cent and 48.6 per cent respectively, according to ESG.

OCBC chief economist Selena Ling said: "Non-monetary gold exports were lifted by rising gold prices due to heightened risk aversion and financial market volatility, while the Covid-19 pandemic is driving pharmaceutical supplies and is proving to be the silver lining in the interim."

Meanwhile, electronic exports grew 5.8 per cent in March, continuing the 2.5 per cent increase in the previous month.

ESG attributed the growth to disk media products, integrated circuits and parts of integrated circuits, which saw an increase of 50.6 per cent, 6.7 per cent and 60.1 per cent respectively.

Maybank economists Chua Hak Bin and Lee Ju Ye noted that the pandemic is fuelling demand for teleconferencing technology and components such as semiconductors for data centres and cloud computing firms, computer monitors and laptops, as reflected by similar trends in South Korea and Taiwan.

"On the other hand, Covid-19 is hitting demand for consumer electronics and smartphones as sentiment dips," they said in a report.

Overall, non-oil exports to the majority of the top markets, including the US and Japan, increased in March, with the exception of Malaysia, Indonesia and China, according to ESG.

Exports to Thailand expanded by a whopping 147.2 per cent in March, up from just a 4 per cent rise in February. This was led by non-monetary gold, disk media products and food preparations, ESG said.

On the whole, total trade decreased by 0.2 per cent in March, while February saw a 5.7 per cent rise.

Regardless of the good showing in March's NODX, economists caution that the months ahead are unlikely to see the same growth.

"One swallow does not make spring and does not herald that downside risks for Q2 have evaporated overnight, as illustrated by the worse-than-expected first-quarter GDP contraction of 6.8 per cent year on year," OCBC's Ms Ling said.

"With the one-month 'circuit breaker', coupled with the rising probability of an extension, there may still be downside to come for domestic economic indicators as economic activity has been restricted to only essential services," she added.

While the biomedical cluster could be sustained in the coming months due to the pandemic, Ms Ling believes NODX is likely to underperform in the coming months. For April, she is expecting a year-on-year contraction of 13.8 per cent.