NODX slipped 5.9% in February

Contractions in both electronic and non-electronic exports weighed down the NODX.

The growth of Singapore’s non-oil domestic exports (NODX) for February slipped by 5.9% YoY from a slightly downwardly revised 12.9% YoY in January. Electronics exports contracted for the third straight month and fell by 12.3% YoY whilst non-electronic exports also dipped by 3.4% YoY after expanding for 8 consecutive months.

UOB senior economist Alvin Liew noted that the weakness of electronics exports was blamed mainly on declines in integrated circuits (-11.4% YoY), parts of personal computers (-48.1%), and diodes & transistors (-25.6%), whilst the decline in non-electronics was mainly attributed to non-monetary gold (-49.4% YoY), petrochemicals (-12.9%) and the “highly unpredictable” pharmaceuticals (-8.0%).

Liew added, “In terms of export destinations, even as NODX to US grew strongly by 54.7% YoY in February it was more than offset by contractions to China (by -23.6%, presumably due to Lunar New Year holidays) and to Europe (-15.8%). Exports to many of the top Asian economies also declined (most likely due to the Lunar New Year holidays too). The exception was NODX to South Korea (+10%) and Japan (+12.6%), thanks to surging non-electronics exports (>30% YoY).

Non-oil re-exports (NORX), which measure regional/global trading sentiments, was flat in after expanding a decent 5% YoY in January. The higher shipment of non-electronic re-exports (+1.2% YoY) helped offset the weaker electronic re-exports (-1.3% YoY).

Liew noted that whilst the start of year trade data will typically be affected by the Chinese Lunar New year effect (LNY was in mid-February in 2018 while it fell in late-January in 2017), Singapore’s NODX still managed to grow by +3.6% YoY in the combined two months. “It also confirmed our long-held view that the very strong on-year growth rates in exports for most of the past year may moderate as the high base effects kick in into 2018. We maintain our forecast of a 6.5% NODX growth for 2018, down from 8.8% in 2017,” he said.

Liew also added that a positive for Singapore’s trade outlook is China’s managed growth slowdown that will still be supportive of export demand from Singapore. “But a bigger downside risk to the trade outlook is that the US’ increasingly protectionist trade stance (the expected imposition of further trade tariffs on China after the steel and aluminum imports tariffs in March) could lead to a spiraling trade war, negatively impacting global trade and inevitably, Singapore’s exports,” he concluded.