Singapore non-oil exports grow at slower pace of 7% in July

Singapore’s key exports saw slower growth last month as shipments of non-electronic products eased, with analysts predicting the momentum will continue to cool in the coming months as the global economic landscape darkens.

Non-oil domestic exports (Nodx) expanded 7 percent year on year in July, with June’s growth revised down to 8.5 percent from 9 percent previously, according to data released by Enterprise Singapore (EnterpriseSG) on Thursday (Aug 17).

Electronic shipments rose by 10.3 percent year on year in July, faster than the 4.1 percent growth in the previous month. Shipments of integrated circuits (ICs), parts of ICs and disk drives increased by 18.5 percent, 83.2 percent, and 110.2 percent respectively, contributing the most to the growth.

Non-electronic shipments grew 6.1 percent year on year, less than the 10 percent rise in June. Specialised machinery, which grew 12.2 percent, as well as pharmaceuticals and structures of ships and boats contributed the most to the growth.

Nodx to the top 10 markets rose as a whole in July, although shipments to China, Japan, Hong Kong and Thailand declined. The largest contributors to the growth in Nodx were the European Union, Malaysia and Taiwan.

Selena Ling, OCBC Bank’s chief economist and head of treasury research and strategy, said the drop in shipments to the four markets could be a reflection of softening domestic demand conditions in China and Hong Kong due to ongoing Covid-19 restrictions.

Ling added that rising inflation and interest rates will also put pressure on incomes and dampen spending on electronic products such as smartphones.

Barclays senior regional economist Brian Tan said that while electronic exports rose, the exports of non-monetary gold and pharmaceuticals, which tend to be volatile, had likely helped to drive Nodx growth for July.

Ling added that the outlook for pharmaceutical exports, which grew 9 percent year on year in July, is not a given.

She said: “High vaccination and booster rates have been cited by big pharmaceutical companies as dampening their earnings guidance ahead as more countries pivot to endemicity.”

Total trade also grew over the year in July as both exports and imports rose, EnterpriseSG said. It expanded 31 percent in July, following 30.8 percent growth in June.

Last week, EnterpriseSG raised its 2022 trade forecasts on the back of a better-than-expected performance in the second quarter. Nodx is now expected to grow by 5 percent to 6 percent this year, from the previous forecast of 3 percent to 5 percent. Total merchandise trade is seen expanding 15 percent to 16 percent, up from 8 percent to 10 percent.

However, with these forecasts in nominal terms, analysts believe that real exports, after stripping out the impact of inflation, have been shrinking through at least the second quarter.

UOB senior economist Alvin Liew said the first seven months of Nodx performance form a strong foundation to achieve 5 percent full-year growth, even while factoring in a slowdown in the second half of 2022.

China’s economic downturn will also likely be a driver of the expected slowdown, said Barnabas Gan, senior economist at RHB Group.

SOURCE: NEWS AGENCIES