Singapore non-oil exports tipped to expand 3-5% in 2020; worst-case scenario for world trade now unlikely

FORECASTS for trade growth in 2020 have been adjusted for the third time, this time with Singapore's non-oil domestic exports (NODX) tipped to grow 3 to 5 per cent year on year while total trade is likely to fall less sharply, by -10 to -8 per cent.

The previous trade growth forecasts were -4 to -1 per cent for NODX and -12 to -9 per cent for total trade.

Trade promotion agency Enterprise Singapore (ESG) said second-quarter NODX growth was better than expected, thanks to "favourable sector-specific exports and output trends". Besides non-monetary gold and pharmaceuticals, electronic domestic exports also grew in the second quarter, after declines in previous quarters.

The upgraded forecasts came with the report that NODX extended its growth at 6.5 per cent in the April-June quarter, slightly better than the 5.4 per cent growth in the first quarter. Total trade on the contrary fell 15.2 per cent in the second quarter following a 0.5 per cent gain in the previous quarter.

ESG said since the last revision in its trade growth forecasts, the International Monetary Fund has estimated the global economy to fall 4.9 per cent in 2020. While Singapore's key trade partners were likely to see output decline, China is expected to grow 1 per cent, down from the previous 1.2 per cent estimate.

But ESG said the global economic outlook remains uncertain, but the World Trade Organization has affirmed that world total trade volumes are now unlikely to reach the worst-case scenario of the 32 per cent plunge projected in April. "While world trade fell sharply in the first half of 2020, the contraction was tempered by rapid government responses," it said, adding that oil prices have also improved.

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The latest trade figures also show oil trade fell 61.9 per cent in the second quarter, dragged down by lower oil prices; non-oil trade slipped 3.3 per cent. Total services trade declined 22.2 per cent to S$107 billion in the second quarter.