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SINGAPORE - Singapore's key exports turned in a rather dismal performance in September, weighed down by a weakening global growth outlook and rising risks of a recession.
Non-oil domestic exports (Nodx) rose by 3.1 per cent year on year in September, following the 11.4 per cent growth in August, data from Enterprise Singapore showed on Monday.
The figure missed the 6.9 per cent median forecast of analysts polled by Bloomberg.
The weak Nodx numbers were led by a fall in electronics exports, which shrank by a sharper 10.6 per cent year on year in September, following the 4.5 per cent drop in August.
Electronics exports have declined for two straight months, snapping the run of growth since November 2020.
The drop was led by disk media products, which fell 42.7 per cent, with personal computers parts down 22.3 per cent and integrated circuits down 12 per cent.
Maybank economists Chua Hak Bin and Lee Ju Ye expect Nodx growth to turn negative in the coming months on the back of a tech downturn, which has hurt global demand for chips and electronic parts.
Mr Irvin Seah, senior economist at DBS Bank, said that the slowdown in electronics was expected as leading indicators like global shipments of semiconductors have actually been falling over the past couple of months.
He expects electronics exports to continue shrinking, in line with DBS’ expectation of a manufacturing growth slowdown for the rest of the year.
Stripping out the effect of higher prices, the Maybank economists said real Nodx based on 2018 prices actually contracted by 3.5 per cent to a seven-month low.
This follows the 4.8 per cent rebound in real Nodx in August.
The contraction in real Nodx indicates that exports continue to be driven and flattered by higher prices rather than trade volumes.
September’s Nodx data also showed growth in non-electronics Nodx slowing, with shipments up 7.6 per cent after growing 16.9 per cent in the previous month.
Pharmaceuticals, measuring instruments and non-monetary gold contributed the most to the growth in non-electronic Nodx.
Petrochemicals, however, recorded a sharp drop, falling 11 per cent year on year versus the 2 per cent growth in August.
On a month-on-month seasonally adjusted basis, Nodx fell for the second straight month, down by 4 per cent to $16.5 billion.
It follows the 3.9 per cent decline in August and also missed analysts forecasts for growth of 0.4 per cent.
Breaking down the numbers by export markets, Nodx to Singapore’s top 10 markets declined as a whole in September.
The China market was the worst hit, with shipments sliding 33.8 per cent in September, after shrinking 18.2 per cent in August.
It was followed by Hong Kong, with a 16.7 per cent drop, after the 31 per cent slump in August.
OCBC chief economist Selena Ling said Nodx to China fell from a high base last year. She added that China’s share of Singapore’s exports has fallen from the 17.6 per cent averaged in 2021 to 15.1 per cent for January to September this year.
Ms Ling said that with no sign of an imminent relaxation of China’s zero-Covid-19 strategy or any step-up in policy stimulus, the outlook for regional manufacturing remains bleak. She added that US-China tensions, especially with new US export curbs on China for semiconductors, are weighing on the outlook.
Nodx to Singapore’s other top markets, including Indonesia, the United States and Thailand, held up, while exports to Taiwan improved - growing 10 per cent after falling 24.5 per cent in August.
Exports to the US rose 8.6 per cent, while exports to the European Union grew 3 per cent in September, but the numbers were down sharply from August.
On a year-on-year basis, total trade grew by 20.7 per cent in September to $116.5 billion. Mr Seah said DBS is already seeing early signs of a rough patch ahead in 2023 and added that the risk of a technical recession is rising in Singapore.
He said that much will depend on how high the US central bank hikes interest rates and what the impact is on global demand.
This will, in turn, weigh on export growth and manufacturing growth for Singapore in 2023, he added.
Source: The Straits Times
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