SINGAPORE — Growth of Singapore’s non-oil domestic exports (Nodx) in July exceeded expectations, thanks largely to a surge in pharmaceutical shipments, the latest data from trade agency Enterprise Singapore showed.

That helped to prop up overall figures as electronic shipments fell for the eighth straight month.

Some economists called July’s figures a “one-off” performance, as a slowdown in global demand for electronics and trade tensions between the United States and China will likely lead to export growth easing for the rest of the year.

Official data released on Friday (Aug 17) showed that non-oil exports expanded 11.8 per cent compared with July last year, far above the 0.8 per cent increase in June.

On a seasonally adjusted basis, Nodx rose 4.3 per cent from June, which saw a decline of 11.1 per cent.

The strong numbers in July trumped market expectations. A poll by news agency Reuters had forecasted that exports would increase by 6.7 per cent year-on-year, and 0.2 per cent on a monthly basis.

Exports to the top 10 markets went up — except for South Korea, Hong Kong and Thailand — with the US (33.7 per cent), Japan (53.9 per cent) and Indonesia (42.9 per cent) registering the largest increase.

Total trade increased by 17.6 per cent compared with the same period a year ago.

Helping July’s surge is pharmaceutical exports, which jumped 109 per cent year-on-year.

Food preparation and primary chemicals exports grew 120 per cent and 41.3 per cent respectively, contributing to the growth of non-electronic shipments.

Overall, non-electronic exports expanded 18.8 per cent year-on-year, much higher than the 4.5 per cent increase in the previous month.

Electronic exports continued to go down for the eighth straight month, dropping by 3.8 per cent year-on-year, a smaller contraction compared with the 8.6 per cent decline in June. They were dragged down by exports of integrated circuits, diodes and transistors and personal computer parts, declining by 12 per cent, 24.7 per cent and 12.3 per cent respectively.

While there may be a smaller contraction in electronics exports in July, DBS Bank senior economist Irvin Seah said that he would not “pin too much hope on it”, as he expects growth to ease.

Several other economists are also of the view that export growth will slow for the rest of the year.

GLOBAL DEMAND SHRINKING FOR ELECTRONIC PRODUCTS

Besides the favourable base effect or high growth for the same period last year, signs are pointing to a decline in global demand for electronics products, such as semiconductors, they said.

Mr Vishnu Varathan, head of economics and strategy at Mizuho Bank, said: “Looking at the underlying trend in exports driven by external demand, it’s a story of moderation in the second half (of 2018).”

Calling out caution on the outlook for Nodx, Mr Brian Tan, a South-east Asia economist at financial services firm Nomura Singapore, said that it is unlikely the strength in pharmaceutical exports can be sustained in the coming months.

However, given the inherently volatile nature of the sector, Mr Varathan said that there can be “another very strong upward swing” for pharmaceuticals, if it coincides with a low base from previous year’s data.

Dr Tan Khay Boon, senior lecturer at SIM Global Education, said that the weightage of the non-electronic components to the overall Nodx is lower than that of electronic components.

“Non-electronics play the role of a buffer, but may not be able to neutralise weakness in the electronics sector,” he added.   

The gloomy outlook for Nodx could be partly attributed to the US-China trade disputes.

Ms Selena Ling, OCBC Bank’s head of treasury research and strategy, said that the 9.1 per cent year-on-year increase in non-electronics exports to China was “insufficient to offset” the 20.3 per cent year-on-year drop in electronics exports, which “could be reflective of some spillover effects from the US-Sino trade spat”.

However, Mr Varathan said that while there is a sense of caution over export orders, fear of a trade war is only having a “marginal effect” on the sluggish outlook. “The dominant theme is the cyclical effect of the normal cycle peaking.”

Giving his forecast, United Overseas Bank economist Francis Tan does not expect a contraction, as growth will still be supported by the non-electronic segments.

UOB expects Nodx to expand at 6.5 per cent, while OCBC is forecasting a 4 to 5 per cent increase for the full year.

On Monday, Enterprise Singapore revised its 2018 growth projection for Nodx to between 2.5 and 3.5 per cent, up from its initial 1 to 3 per cent, due to a better-than-expected performance in the first half of the year.