Singapore exports fall again in Nov; 14.6% drop is more than expected
Elysia Tan
SINGAPORE’S non-oil domestic exports (NODX) contracted by 14.6 per cent on the year in November from a high year-ago base, going by Enterprise Singapore (EnterpriseSG) data on Friday (Dec 16).
This far outstripped the median 6.5 per cent decline forecast by economists in a Bloomberg poll. It came after October’s 6.1 per cent fall, which was the first since November 2020. Both electronic and non-electronic exports fell.
On a seasonally-adjusted monthly basis, NODX decreased for the fourth consecutive month, down 9.2 per cent in November following October’s 4.2 per cent decline. This is “the longest stretch (of falls) since end-2017/early 2018,” said UOB head of research Suan Teck Kin.
Both non-electronic and electronic NODX contracted sequentially. On a seasonally-adjusted basis, the level of NODX was S$14.3 billion in November, lower than in October (S$15.8 billion), the year-ago period (S$16.8 billion) and 2021’s average (S$16.1 billion).
Suan said that there is “a clear downtrend” in NODX values after 2021 and early 2022’s boom, adding that they could head towards 2018 to 2020’s monthly average of S$14.4 billion on the weak external environment.
“Singapore’s external sector has graduated from a slowdown to a slump,” said Oxford Economics senior Asia economist Alex Holmes: NODX is now “almost 10 per cent below the pre-pandemic level in December 2019, and nearly 16 per cent lower than a year ago”.
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The shipment of electronic products fell 20.2 per cent year on year in November, against the previous month’s 9.3 per cent contraction. Contributing most to the decline in electronic NODX were integrated circuits (-23.8 per cent), disk media products (-59.8 per cent) and parts of PCs (-27.5 per cent). Analysts agreed that semiconductors continue to drag on exports.
Suan said that monthly values of integrated circuit exports “have been running at the S$2 billion pace from August 2021 to August 2022 before turning lower”, suggesting that “semiconductor downturn is at a nascent stage and may extend further in the months ahead”.
Non-electronic exports also fell 12.8 per cent from the year-ago period, extending October’s 5.1 per cent decline. Non-monetary gold (-56.3 per cent), pharmaceuticals (-25.5 per cent), and primary chemicals (-54.1 per cent) contributed the most to the decline in non-electronic NODX.
Month on month, seasonally adjusted, Barclays economist Brian Tan said that NODX is estimated to have plunged by 10.4 per cent in November, excluding exports of usually volatile non-monetary gold and pharmaceuticals. But they played “only a bit role”. A pullback in shipments of specialised machinery – which spiked in October – largely caused the fall in non-electronics NODX. The estimated reading more than reversed the 2.9 per cent increase in October.
The latest NODX prints were released after Singapore’s manufacturing Purchasing Managers’ Index (PMI), and in particular the electronics sector PMI, remained in contraction territory in November, despite upticks.
NODX to Singapore’s top 10 markets shrank overall in November, mainly due to mainland China, where exports were down 31.2 per cent; Hong Kong, down 41 per cent; and Malaysia, down 12.9 per cent.
NODX to the European Union, Japan and the United States rose, though at a slower rate than in the month before in the latter two regions. The fewer markets with positive year-on-year outcomes in November signal weakening external demand as global central banks tighten monetary policy, Suan said.
In line with the fall in NODX, total trade was down 2.2 per cent year on year in November, reversing from the 8.4 per cent growth in October and marking the first year-on-year fall since February 2021. Exports were down 4.2 per cent while imports saw flat growth.
The increase in oil trade amid higher oil prices was insufficient to offset the decline in non-oil trade – the latter driven by electronics trade amid weakened global semiconductor demand, said EnterpriseSG. “Similarly, electronic powerhouses including South Korea and Taiwan saw lower exports year on year in November, based on media reports.”
On a seasonally adjusted monthly basis, similarly, total trade declined 7.2 per cent, deepening from October’s 5.2 per cent decrease. The level of total trade reached S$102.5 billion, lower than the previous month’s S$110.4 billion. Both exports and imports declined.
UOB is maintaining its 2022 full-year NODX growth forecast at 4 per cent. Analysts agreed that worsening electronics performance and weaker demand from major export partners herald further falls. Holmes expects mild recessions in major export partners and “a few rough quarters”. Suan added that the high-base effect will continue to work against NODX early next year.
RHB senior economist Barnabas Gan agreed that the China data is not currently “showing us any form of recovery”, and expects trade to slow further, “at least to the first quarter of 2023, if not the first half”.
However, he remains optimistic for a “U-shaped recovery” next year. RHB expects that the Federal Reserve will begin to telegraph a 2024 rate cut in H2 next year, injecting some optimism into global markets. Together with the “second half story” of China’s reopening being a boon for Asian exporters, he expects trade to recover in H2 2023.
RHB forecasts 2023 NODX to expand by 1 per cent next year, against the official projection of -2 to 0 per cent.
Other analysts were less positive. Tan said the “sharp drop” in NODX reinforced “policymakers’ expectations of a visible slowdown in GDP (gross domestic product) growth in 2023”. Falling exports dampen GDP growth.
Holmes noted that, with November’s data, the Monetary Authority of Singapore’s 1.8 per cent median GDP growth forecast in its recently released survey of professional forecasters “looks too upbeat”.
“We expect net trade to be a major drag on Singapore’s growth next year. Tumbling export earnings are also likely to weigh on domestic demand, stalling business investment and employment growth,” he said.
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