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Strong export growth unlikely to be sustained: economists

SINGAPORE'S exports logged another month of strong growth in May as non-oil domestic exports (NODX) beat forecasts to jump 15.5 per cent over the same month a year ago thanks largely to non-electronic shipments.

This was significantly better than the 3 per cent increase predicted by economists in a Bloomberg poll.

The increase came as non-electronic exports outweighed sliding electronics shipments according to Enterprise Singapore data out on Monday.

Here are some comments from economists on the latest export numbers.

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Chua Hak Bin, Maybank Kim Eng:

"We think that exports growth will likely see some slowdown in the second half of 2018 as the momentum in electronics subsides.

Export data for May was still strong in Asia, with China, South Korea and Taiwan all posting double-digit growth.

Escalating US-China trade war risks may however hit exports in the second half, if both countries go ahead with the threatened tariffs on US$50 billion worth of imports.

For Singapore, services, as well as services export growth, will be more resilient and support growth for the rest of 2018. Our GDP (gross domestic product) forecast stands at 3.5 per cent for 2018, at the upper bound of MTI’s (Ministry of Trade and Industry) 2.5 per cent to 3.5 per cent forecast range."

Alvin Liew, UOB:

"Despite May's stellar NODX performance which will bode well for Singapore's second-quarter growth outlook, we hesitate to upgrade our NODX outlook for 2018 for various reasons. 

Part of May’s NODX outperformance was due to a two-month surge in pharmaceutical exports which have a notoriously volatile history.

The other sobering factor is the continued decline in electronics NODX which is seeing high base effects already started to kick in materially.

Escalating US-China trade tensions (and US trade tensions with the rest of the world) are also clouding the outlook for a very trade-dependent Singapore.

The very strong export growth rates in April and May are unlikely to be sustained into the second half of 2018. Thus, we maintain our forecast for 2018 NODX to expand at a slower pace of 6.5 per cent, compared to the 8.8 per cent in 2017."