Thanks to burgeoning demand from China.
Singapore’s NODX swelled 21.5% year-on-year (yoy) in February, picking up from an 8.6% rise the month before, according to an RHB report.
The strong performance was partially inflated by a low base effect and higher number of working days, as the Lunar New Year celebrations fell in January this year compared to February 2016.
"Nevertheless, even without the seasonality effect, for the first two months of the year combined, NODX expanded 14.7% yoy, accelerating sharply from a 2.7% climb for 4Q16, suggesting that export recovery remains intact," said RHB.
“NODX to China and North Asia increased sustainably in 2M17, whilst shipments to ASEAN also picked up from 4Q16. However, NODX to Europe declined 4.4% in the first two months of the year, surrendering its 5% gain in 4Q16,” it added.
Here's more from RHB:
Going forward, we project for NODX to grow at a more moderate pace, as semiconductor demand wanes.
We maintain our projection for NODX to expand 2% in 2017, compared to a 3.2% drop last year, underpinned by simultaneous fiscal stimulus from developed nations, firming economic recovery in the US, and improving commodity prices, which would support ASEAN economic growth.
Electronic NODX jumped 11% yoy in 2M17, accelerating sharply from its +1% climb in 4Q16. The improvement continued to be driven by increased demand for semiconductors, which rose 28.9% yoy in 2M17, compared to +11.8% in 4Q16.
Meanwhile, shipments of PCs deteriorated to -20.2% in 2M17, from -12.0% yoy in 4Q16, capping some of the upside.
Similarly, non-electronic NODX grew 16.3% yoy in 2M17, rocketing from a 4.8% bump in 4Q16. Petrochemical exports led the gains, jumping 41.4% yoy in 2M17, after rising 11.8% in 4Q16.
However, pharmaceutical shipments declined 9.1% yoy in the first two months of the year, retreating from a 1.7% rise in 4Q16, thereby capping some of the upside.
In light of February’s hefty NODX outturn and with re-exports on the rise, we believe 1Q GDP would come in strong at 3.8% yoy, compared to +2.9% in 4Q16, before moderating as the year progresses. We maintain our projection for Singapore’s GDP to grow 2.2% this year, compared to 2% in 2016.
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