Trade uncertainty clouds NODX outlook despite early gains: analysts

RHB forecasts NODX to grow by 2% YoY. However, UOB is more cautious, projecting a 1.5% growth rate.

Singapore’s non-oil domestic exports (NODX) are expected to grow in 2025, supported by resilient global demand and strong electronics exports, but analysts remain cautious due to ongoing trade tensions and tariff risks.

According to RHB, NODX is forecasted to grow by 2% YoY, benefitting from a strong semiconductor cycle and easing global monetary conditions. However, UOB is more cautious, projecting a 1.5% growth rate, citing concerns over rising trade policy uncertainty and slowing electronics momentum.

Electronics exports remain a key driver of NODX, with integrated circuits, disk media products, and PCs leading the sector. In February 2025, Singapore’s electronics NODX expanded 6.9% YoY, following a 9.5% increase in January, reinforcing the sector’s strength.

However, UOB warns that electronics growth has likely peaked, mirroring trends in South Korea and Taiwan, where the semiconductor cycle has begun to cool.

On a six-month moving average basis, Singapore’s electronics NODX growth moderated to 9.7% in February, down from 14.1% in January and 15.2% in December 2024.

Despite positive export trends, trade risks remain a major concern. RHB highlighted that US trade protectionist policies and global tariff conflicts could affect Singapore’s export momentum. However, Singapore’s US-SG Free Trade Agreement (FTA) and its trade surplus with the US may shield it from direct impact.

UOB sees rising trade policy uncertainty as a significant headwind, with the Trade Policy Uncertainty Index hitting a historical high in February 2025.

Escalating trade tensions could dampen business investment and consumer confidence, particularly in the US, where tariff disputes have already impacted economic sentiment.

Singapore’s NODX to the US, Taiwan, and the EU expanded in February, with shipments to Taiwan surging 77.9% YoY and the US rising 21.5% YoY. However, exports to China fell sharply by 27.4% YoY, reflecting weaker Chinese demand and geopolitical uncertainties.

Looking ahead, analysts expect Singapore’s trade performance to remain uneven, with strong semiconductor demand supporting exports, but trade disputes and a potential slowdown in electronics weighing on overall momentum.

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