Singapore’s export growth slows to 3% in 2022; expected to be flat or decline in 2023

SINGAPORE’S non-oil domestic exports’ (NODX) growth slowed to 3 per cent in 2022 from 12.1 per cent in 2021, in line with earlier estimates, according to Enterprise Singapore (EnterpriseSG) figures on Monday (Feb 13).

Trade performance is expected to moderate in 2023, given the high base in 2022, said EnterpriseSG. It maintained its 2023 forecast at -2 per cent to 0 per cent for both NODX and total merchandise trade.

Some private-sector economists were not as optimistic, forecasting that Singapore’s key exports could shrink more sharply than official estimates. “Continued weakness in global semiconductor demand and reduced external demand as the United States economy slows will result in a potentially sharper contraction in NODX exports in 2023 than forecast by ESG,” said ANZ head of Asia research Khoon Goh.

Another area of uncertainty in Singapore’s trade outlook is the trajectory of China’s economy, said Moody’s Analytics economist Denise Cheok. “Most of the growth in exports will come in the second half of the year, when the initial spike in Covid-19 cases in China eases and the economy starts to pick up on the other side of its reopening.”

“Growth might moderate even further from EnterpriseSG’s estimates if this boost in exports is not strong enough to offset the weak start of the year,” she added.

UOB senior economist Alvin Liew similarly expects Singapore’s NODX to see a few more months of year-on-year declines before improving in the second half of the year. He projects full-year NODX to contract by -5.5 per cent in 2023, below official estimates.

In 2022, both electronic and non-electronic NODX registered the third straight year of growth. But the pace of NODX growth slowed, “partly reflecting weakened global semiconductor demand and global economic activity”, said EnterpriseSG.

Electronic NODX grew 0.5 per cent in 2022, down from 16.3 per cent in 2021. Non-electronic NODX grew 3.8 per cent, down from 10.9 per cent.

Oxford Economics senior economist Alex Holmes said the full-year figures “hide a lot of the change that’s happening more recently”. “NODX and wider exports started the year at a high base, but started to really fall back sharply over the second half of 2022. It is this trend of recent momentum that I would focus on more,” he added.

Singapore’s exports have performed similarly to others in the region, which have been “tumbling at a pace not seen since the onset of the pandemic in 2020,” noted Holmes. This downward trajectory is expected to continue, and he forecasts a much larger decline than -2 per cent to 0 per cent for NODX this year.

Citing International Monetary Fund projections that global economic activity will grow by a slower 2.9 per cent in 2023, EnterpriseSG said: “Most of Singapore’s key trade partners, including the US, eurozone and Asean-5, are expected to grow at a slower pace in 2023, except China and Japan.”

For trade specifically, the World Trade Organization has projected “subdued” global merchandise trade in 2023, with growth slowing to 1 per cent. “Headwinds in the global economy including the war in Ukraine, inflation and monetary tightening could weigh on global trade and output,” said EnterpriseSG.

Singapore’s total trade and NODX could also be hit by the moderating global demand for semiconductors, it added.

Softening external demand will likely be the main growth headwind for Singapore’s trade performance this year, said Standard Chartered’s regional read of research for Asean and South Asia Edward Lee. “Global trade volumes contracted in November, underlining the weakness in global demand. Regional data also indicates a weakness in trade performance.”

Domestically, the electronic purchasing managers’ index has been in contractionary territory for six straight months, while the electronics new orders-to-inventory ratio has also been falling on a year-on-year basis for the same period, he noted.