Economists raise full-year NODX growth forecasts after July’s 24.2% rise

[SINGAPORE] Economists have raised their full-year forecasts for Singapore’s key export growth, even after July’s non-oil domestic exports (NODX) reading came in below expectations.

Their forecasts were escalated on expectations that artificial intelligence-related demand will continue to support the electronics sector.

NODX grew 24.2 per cent year on year in July, extending a 20.8 per cent rise in June and marking a fifth straight month of double-digit growth.

But the reading fell short of private-sector economists’ median expectation of 26.5 per cent growth, indicated a poll by Bloomberg.

For the first seven months of the year, NODX growth averaged 19.4 per cent, data from Enterprise Singapore showed on Monday (Aug 17).

The expansion was driven almost entirely by electronics exports, which surged 112 per cent year on year in July, from 105.1 per cent in June.

Electronics NODX growth was led by disk media products (339.1 per cent); personal computers (120.8 per cent) and integrated circuits (84.5 per cent).

Non-electronic exports fell 2.3 per cent, weighed down by pharmaceuticals, petrochemicals and food preparations.

Nomura economists Euben Paracuelles and Yiu Chen said the July figure was “boosted by broadening AI-related demand”, with electronics NODX growth on a three-month moving average basis surging to 103.9 per cent, from 88.1 per cent, “consistent with the global tech uptrend”.

UOB associate economist Jester Koh noted a widening “K-shaped divergence” between electronics and non-electronics exports.

He added that momentum was broadening beyond traditional markets, with NODX growth picking up to markets such as Thailand, India, Indonesia and the EU, along sustained growth in the US, Taiwan and South Korea.

On a seasonally adjusted month-on-month basis, NODX slipped 0.3 per cent in July.

Sustained growth

Despite the disappointing July reading, several economists raised their full-year NODX forecasts on the back of a stronger-than-expected H1 performance.

EnterpriseSG had raised its 2026 NODX growth forecast on Aug 11 to a range of 14 to 16 per cent, from 3 to 5 per cent previously, given the exceptionally strong electronics-led first-half performance.

RHB raised its full-year NODX growth forecast to 15.5 per cent, from 11.5 per cent previously.

Analysts Barnabas Gan and Laalitha Raveenthar said the revision was driven by “the stronger-than-expected year-to-date performance and sustained strengths in the electronics and electricals exports”.

Still, they flagged the possibility of a sharper-than-expected correction in AI-related markets, as well as the 12.5 per cent Section 301 tariff imposed by the US on Singapore as downside risks.

Meanwhile, Maybank raised its full-year forecast to 18 per cent, from 15 per cent before.

Economists Chua Hak Bin and Brian Lee said the global AI infrastructure buildout remained a “durable tailwind” for Singapore’s exports, adding that the data centre capital expenditure cycle was unlikely to reverse abruptly given the sunken costs already committed.

As for the downside risks, Dr Chua and Lee added that they do not expect the US to impose blanket tariffs on Singapore, even though the the Republic was named in a report on China’s “shadow” transhipment network. This is because the city-state was placed in the lowest-risk Tier 3 category as a “small opportunistic Chinese target”.

UOB’s Koh agreed that the White House report on transhipment could be a precursor to stronger tariff enforcement on goods deemed to have been rerouted through a third country to skirt US duties.

NODX to top markets

Non-oil re-exports rose 51.3 per cent in July, moderating from June’s 60.3 per cent gain.

Meanwhile, total merchandise trade grew 38.6 per cent, from 49.3 per cent in June, as both exports and imports expanded.

Among Singapore’s top 10 markets, NODX to the US expanded 62.8 per cent in July, up from 36.7 per cent the month prior, driven by disk media products, personal computers and telecommunications equipment.

Shipments to China accelerated to 37.6 per cent, from 7.7 per cent, on stronger demand for specialised machinery, non-monetary gold and integrated circuits.

NODX to Taiwan (32.4 per cent), South Korea (53.3 per cent), Hong Kong (36.4 per cent) and Malaysia (23.4 per cent) also posted gains.

The EU 27 was the only major market where exports contracted, with NODX falling 35.5 per cent, from a 20.8 per cent rise in June. This was due to a sharp decline in non-electronic exports.