Key exports grow at strongest pace in five years

SINGAPORE — Non-oil domestic exports (Nodx) grew at the strongest pace in five years last month, boosted by demand for locally-made electronic and non-electronic goods as shipments to all of Singapore’s top 10 markets rose.

Nodx surged 21.5 per cent in February from the same month a year ago, accelerating from the 8.6 per cent rise in January to extend the growth to four straight months, trade agency International Enterprise (IE) Singapore said on Friday (March 17). 

Last month’s performance — the best since the 32.2 per cent rise in February 2012 — handily beat the 12.8 per cent growth that economists had forecast in a Reuters poll.

The Chinese New Year effect — with the holiday falling in January this year but in February last year — contributed partly to the surge. “This is the strongest year-on-year growth rate in five years in part due to a low-base effect,” said UOB economist Francis Tan, who added that exports are likely to continue to expand, supported by demand for electronics.

“The four-month on-year gains in electronics exports was a result of past months of higher manufacturing activities and inventory accumulation in the semi-conductor segment. Semi-conductor production was on an 11-month streak of double-digit expansion, averaging 37 per cent year-on-year each month,” he added.

Last month, shipments to China, Singapore’s largest export destination, soared by 65.1 per cent, extending the previous month’s growth of 36.9 per cent, led by petrochemicals, specialised machinery and non-monetary gold, which is gold not held as reserves by the authorities.

“Demand from China and Taiwan continued to be the main drivers, with Nodx ... surging by 65.1 per cent and 54 per cent, respectively,” said Maybank Kim Eng Research economists Chua Hak Bin and Lee Ju Ye. 

“Export growth also broadened to positive growth across all the top 10 markets, where previously EU and Malaysia were still negative. This supports our view that the manufacturing and trade momentum remains strong, and will continue to lead and support growth in 2017,” they added. 

Nodx to the EU jumped 28.7 per cent in February, turning around from the 25.2 per cent drop in January; while Nodx to Malaysia rose 17.2 per cent last month, bouncing back from the 4.2 per cent decline in the previous month.

However, economists warned that rising protectionist sentiment worldwide could put a lid on the Republic’s export growth.

“We are carefully watching the negative impact from the anti-globalisation rhetoric that has been fuelling developed markets’ sentiments,” said Mr Tan. “One country to watch out is still the United States. The US is the second-largest source of final demand for the goods produced in Singapore and further trade-protectionistic measures will only hurt the path of our export recovery.” 

Shipments of electronics expanded by 17.2 per cent last month, following the 6.1 per cent rise in the previous month, helped by integrated circuits, disk media products and personal computer parts. Non-electronic Nodx grew by 23.3 per cent in February, following the 9.8 per cent increase in the previous month. Petrochemicals, specialised machinery and non-monetary gold contributed to most of this growth.