August exports post surprise rebound

SINGAPORE — Local exports rebounded last month as higher shipments of petrochemicals and pharmaceuticals offset the persistent weakness in electronics, but the turnaround was not enough to convince analysts of a full recovery.

Non-oil domestic exports (NODX) rose 6 per cent on-year in August, exceeding analysts’ estimates, data from International Enterprise Singapore showed. This followed three consecutive months of contraction between May and July, when NODX fell 6.6, 4.6 and 3.3 per cent, respectively. Compared with July, NODX rose 7.6 per cent after seasonal adjustments.

Shipments to all of the Republic’s top 10 markets — except Hong Kong, Japan and Thailand — rose on-year. The top three contributing countries were South Korea, Taiwan and China.

The biggest improvement was seen in NODX of petrochemicals, pharmaceuticals and structures of ships and boats, which rose 39.9, 26.9 and 1,337.8 per cent, respectively.

Overall, non-electronic exports expanded by 12.1 per cent last month, reversing from a 1.1 per cent decline in the previous month.

However, electronics exports contracted for the 25th month, falling by 6.9 per cent. This was largely attributed to a slowdown in personal computer parts, integrated circuits and disk drives.

“The lack of a recovery in electronics is disappointing given the broader pick-up in external demand. Singapore’s electronics shipments are notably underperforming those of newly industrialised economy peers Taiwan and South Korea,” said Barclays economist Leong Wai Ho.

Dr Tan Khay Boon, a senior lecturer at SIM Global Education, expects the weakness in the electronics segment to persist amid the ongoing restructuring in manufacturing.

“Whether the better performance in the non-electronics segment can continue to compensate (for) the poor performance in the electronics segment remains to be seen. This is because exports for pharmaceuticals are known to be highly volatile. The bigger concern in the trade performance would be the weaker demand arising from the slower growth in economies such as China, South Korea, Japan, Hong Kong and the European Union,” said Dr Tan.

Overall, economists predict that NODX growth for the rest of the year will remain flat. UOB Global Economics and Markets Research said Singapore’s NODX growth for the whole year will be between -2.0 per cent and -1.0 per cent.

Mr Leong added: “Singapore remains highly leveraged to the global economy, but the pass-through from stronger external demand is likely to take longer than in the past, given Singapore’s role as a marginal producer in the Asian electronics supply chain.

“However, we expect increased equipment investment, particularly in the United States, to help support a recovery in the coming quarters.” TAN WEIZHEN