Export forecast raised after 15.2% jump in first quarter

SINGAPORE — Trade development agency International Enterprise Singapore on Thursday (May 25) raised the Republic’s full-year forecast for export growth, citing the solid performance in the first quarter and improved global economic conditions.

IE Singapore said non-oil domestic exports (NODX) for 2017 are forecast to grow between 4 and 6 per cent, up from the earlier forecast of zero to 2 per cent. “The global economic and trade outlook has improved since early 2017, notwithstanding uncertainties surrounding near-term economic and policy developments,” it said. 

Boosted by shipments to China, NODX surged 15.2 per cent in the first quarter from the corresponding period a year ago, with both electronic and non-electronic products scoring gains, IE Singapore said. The growth accelerated from the previous quarter’s 2.7 per cent increase.

“Non-electronic NODX accounted for about 80 per cent of the growth, driven primarily by a surge in chemicals and petrochemicals exports. In terms of markets, growth in NODX in the first quarter of 2017 was supported by exports to Asia, specifically China, Asean and the NIEs (newly industrialising economies),” said Ms Jacelyn Teo, group director, Planning Group at IE Singapore.

Besides the strong first-quarter report card and the improvement in the global growth outlook, the forecast upgrade also reflected “favourable sector-specific export trends, particularly in the petrochemicals and electronics sectors”, she added.

Singapore’s exports to nine of its top 10 markets rose in the first quarter, led by shipments to China, Taiwan and South Korea. Only shipments to the European Union fell. 

Exports of electronic products rose by 9 per cent, building on the previous quarter’s 1 per cent growth, led by shipments of integrated circuits, personal computer parts and disk media products. 

Exports of non-electronic products rose by 17.8 per cent in the first quarter, following the 3.5 per cent growth in the fourth quarter. 

The largest contributors to the rise were specialised machinery, petrochemicals and non-monetary gold, which is gold not held as reserves by the authorities.

Despite Thursday's upgrade in the official export forecast, some private-sector economists remained cautious, saying the robust NODX growth achieved in the first quarter may not be sustained.

ANZ economist Ng Weiwen said: “We expect the export recovery to taper off in the second half of the year. It is unlikely to be sustained. We are seeing signs of maturing in the tech cycle.”

“The export recovery thus far has been narrowly focused and reliant on China, and given the extent of financial deleveraging there at this juncture, a decline in credit and investment growth could reduce China’s demand for our goods,” he added.

There are signs that the global manufacturing rally could be fading, DBS senior economist Irvin Seah said. 

“Purchasing Managers’ Indexes in the United States and China and recent NODX figures have all fallen in the latest April data set, suggesting that the run-up in global consumer demand could be waning,” he said.

In Singapore, NODX fell 0.7 per cent in April from a year ago, due to a steep decline in pharmaceutical shipments, IE data showed last week. 

The fall bucked expectations of continued expansion and ended a growth streak that was the strongest in more than six years.