Singapore's non-oil exports up 3% in February, reversing January's drop

SINGAPORE exports were back in positive territory in February 2020, defying expectations of a slowdown led by the novel coronavirus outbreak, thanks to a growth in both electronics and non-electronics shipments.

Non-oil domestic exports (NODX) rose 3 per cent year-on-year in February, reversing from a 3.3 per cent decline in the previous month, according to figures released by Enterprise Singapore on Tuesday.

Electronics exports increased by 2.5 per cent in February, versus a 13 per cent contraction in the previous month. Parts of integrated circuits, capacitors and disk media products contributed the most to the growth in electronics NODX.

Meanwhile, non-electronic shipments grew 3.2 per cent in February, after a 0.1 per cent dip in January. This was attributed to an increase in specialised machinery, non-electric engines and motors, as well as pharmaceuticals.

According to economists, the good showing could be due to the low-base effect stemming from Chinese New Year in February 2019.

"Moreover, it may also be argued that Covid-19 concerns had not fully been felt across several of Singapore's key trading partners such as the US and Europe," said Barnabas Gan, economist from United Overseas Bank.

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Beyond the base effect however, Barclays regional economist Brian Tan said the sequential decline was also milder than anticipated at 4.8 per cent month-on-month after seasonal adjustment, only slightly more than offsetting the 4.5 per cent expansion in January.

Mr Tan added: "The data suggests that while shipments to China plunged in February, this was partly offset by stronger demand from the rest of the world."

With the exception of China and Hong Kong, Singapore's non-oil exports to the majority of the top markets increased in February, the agency said. The largest contributors to the NODX increase were Japan (+61.7 per cent), the European Union (+43 per cent), and the United States (+23.5 per cent).

On a month-on-month seasonally adjusted basis, NODX declined 4.8 per cent in February, reversing the 4.5 per cent growth seen in January. This comes as non-electronic domestic exports declined while electronics exports grew, Enterprise Singapore said.

Year-on-year, total trade grew 5.7 per cent in February 2020, after a 3.2 per cent drop in the preceding month, on increases in both exports and imports.

But the surprise uptick is unlikely to last, given the worsening virus outbreak.

Maybank economists said: "The rapid spread of the virus outbreak in Europe (12 per cent of total NODX) and US (13 per cent) will likely hurt global demand.

"The recent spike in Covid-19 cases in neighbouring countries including Malaysia, Indonesia and Thailand, is triggering more drastic government measures and will dampen regional trade."

OCBC chief economist Selena Ling is expecting NODX to contract by up to 2 to 4 per cent year-on-year in 2020 "amid a very fluid global and domestic Covid-19 situation".

"With the growing lockdowns at the city and country levels worldwide, we may see some market trepidation on the potential impact on our exports and imports," she said.