Exports rise 8.5% in July in third straight month of expansion

SINGAPORE — The Republic’s export sector continued to do well, expanding for the third straight month in July, supported by shipments of both electronic and non-electronic products.

Following last week’s upgrade of the export forecast for the year by trade agency International Enterprise (IE) Singapore and the continued boom in the shipments of electronics, some economists expect the momentum to sustain into the third quarter.

Non-oil domestic exports (Nodx) rose by 8.5 per cent last month from July a year ago, slowing slightly from the upwardly revised 8.8 per cent growth in the preceding month, IE Singapore said on Thursday (Aug 17).

On a seasonally adjusted basis, the level of Nodx reached S$14.2 billion last month, it added.

For the first seven months of the year, Nodx grew by 9.1 per cent, marking the fastest growth over the corresponding periods since 2010, said OCBC economist Barnabas Gan. 

“Given that Singapore’s growth is heavily reliant on its trade performance, the strong exports seen year-to-date continue to paint a rosy external environment for Singapore’s economy. In fact, the year-to-date performance in global economic activity and trade have maintained their momentum, in part reflected by the positive

Purchasing Managers’ Indices across Asia, better-than-expected growth prints from the United States and European Union, and generally positive external trade prints across key economies,” he said.

“Looking ahead, Singapore’s growth outlook should continue to be underpinned by its rosy external environment outlook. Barring further negative surprises coming out from the global geopolitical arena and uncertainties in the US political space, we look for Singapore’s Nodx growth to clock a full-year print of 7.4 per cent (slightly higher than the official forecast of 5 per cent to 6 per cent),” he added.

In July, electronic exports rose for the ninth consecutive month with a year-on-year increase of 16.3 per cent, accelerating from the 5.4 per cent growth in the previous month. Growth was driven mainly by integrated circuits, personal computer parts and disk media products.

Shipments of non-electronics rose by 5.2 per cent in July, easing from the 10.1 per cent growth in the previous month. The expansion was helped by the exports of specialised machinery, petrochemicals, and non-electric engines and motors. The pharmaceuticals segment slumped 53.6 per cent year-on-year.

“Today’s release of last month’s Nodx provided a second month of data support which validates our view, and we still maintain our positive outlook on the overall Nodx expansion for this year, supported by continued growth in electronics exports,” said UOB economist Francis Tan. He upgraded his Nodx forecast for the year to 5.3 per cent from 4 per cent.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said electronics exports and re-exports appear to be strengthening, not waning. 

“Exports and trade continue to drive the growth recovery, with early signs that the momentum is holding up well in the third quarter,” Mr Chua and Ms Lee said.

“We expect Nodx strength to continue in the third quarter before moderating in November and December due to high base effects,” they added. 

However, DBS senior economist Irvin Seah said the Republic’s export sector is “increasingly showing signs of lethargy”, pointing to the slowdown in last month’s Nodx performance compared with the previous month. 

“This is consistent with our long-held view that the export rally has peaked and the headline figure should be running sideways, with a slight bias on the downside in the coming months,” he said.

Nodx to eight out of the top 10 markets rose last month, except for the EU and the US. 

The top three Nodx markets last month were China, Thailand and South Korea. Shipments to China, Singapore’s largest export destination, grew by 20.9 per cent last month, led by integrated circuits, petrochemicals and specialised machinery.