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Singapore's non-oil exports fall 4.5% in May, first drop in 2020

While NODX may not slip further, economists see a subdued performance in coming months

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

Singapore

DOMESTIC electronics exports were usually the culprit but this time the knock-out punch came from non-electronic shipments, which brought Singapore's key non-oil domestic exports 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, according to 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, according to private-sector economists.

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"Exports may (already) be bottoming out as more countries gradually reopen their economies," said economists at Maybank Kim Eng in a brief report. 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."

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," he said.

Nevertheless, economists warned that much is still unknown about Covid-19 that it remains a menace, with OCBC's Ms Bank's Ms Ling pointing to troubling signs in the re-emergence of cases in Beijing and other spots. Mr Gan points to the surfacing of renewed US-China trade tensions, which is also clouding the NODX's growth prospects.

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

Meanwhile, according to the Maybank Kim Eng economists, the global lockdowns appear to have been a boon to Singapore's domestic electronics shipments, helping to lift the electronics NODX up from a 0.6 per cent dip in April to grow 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).

"Electronics exports are benefiting from work-from-home policies as companies depend more on technology to overcome lockdowns," they said. "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 & 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, according to 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 has overtaken 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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