March exports surge 17.6% but economists see more gloom ahead

Singapore

SINGAPORE'S exports grew by a surprising 17.6 per cent in March, defying the odds of a coronavirus-led slowdown, but economists believe this good showing is unlikely to continue into April and beyond.

The jump in March's non-oil domestic exports (NODX) has dramatically exceeded private-sector economists' expectations. They had predicted a contraction of 8 per cent, according to a Bloomberg poll.

In comparison, February's NODX saw more modest gains at 3.1 per cent, although that too came as a surprise to economists at that time.

Enterprise Singapore, which released the data on Friday, noted that March's performance is due to the low base a year ago. In March 2019, NODX slumped nearly 12 per cent year on year, logging the biggest drop in more than two years, amid a trade war between the United States and China.

But Barclays economist Brian Tan pointed out that this low-base effect is a partial reason, given that NODX jumped 12.8 per cent month on month after seasonal adjustment despite the pandemic. He added that this more than reverses the 4.7 per cent drop in February.

Both electronic and non-electronic exports increased in March, with the latter seeing a surge of 20.5 per cent.

Non-monetary gold exports shot up by 242.5 per cent, while that for specialised machinery and pharmaceuticals expanded by 54.2 per cent and 48.6 per cent respectively, according to ESG.

OCBC chief economist Selena Ling said: "Non-monetary gold exports were lifted by rising gold prices due to heightened risk aversion and financial market volatility, while the Covid-19 pandemic is driving pharmaceutical supplies and is proving to be the silver lining in the interim."

Meanwhile, electronic exports grew 5.8 per cent in March, continuing the 2.5 per cent increase in the previous month.

Maybank economists Chua Hak Bin and Lee Ju Ye noted that the pandemic is fuelling demand for teleconferencing technology and components, as reflected by similar trends in South Korea and Taiwan.

"On the other hand, Covid-19 is hitting demand for consumer electronics and smartphones as sentiment dips," they said in a report.

Overall, non-oil exports to most top markets, including the US and Japan, increased in March, according to ESG, with the exception of Malaysia, Indonesia and China.

Exports to Thailand expanded by a whopping 147.2 per cent in March, up from just a 4 per cent rise in February. This was led by non-monetary gold, disk media products and food preparations, ESG said.

Total trade decreased by 0.2 per cent in March, while February saw a 5.7 per cent rise. Despite the good show in March, economists are pessimistic about the days ahead, since many major economies are on at least partial, if not full, lockdown.

Barnabas Gan, economist at United Overseas Bank, is expecting 2020 full-year NODX to shrink 1 per cent due to the increasingly challenging external environment.

Mr Gan added that it remains uncertain if non-monetary gold exports can continue to be the saving grace for Singapore's NODX, as it accounts only for a very small portion of exports. He referenced a surge in gold exports in May 2016, which turned out to be short-lived and highly volatile, as it was driven by "safe haven demand" amid global economic uncertainties, including Brexit concerns.

OCBC's Ms Ling said while the biomedical cluster could be sustained in the coming months due to the pandemic, NODX is likely to underperform in the coming months. She is expecting full-year NODX to contract 4 to 6 per cent in 2020.