English
Singapore export growth cools to 2.7% in August despite support from electronics boom
KEY Singapore exports grew for the ninth straight month in August – but came in well under analysts’ forecasts, as non-electronics shipments shrank year on year.
Non-oil domestic exports (NODX) increased by 2.7 per cent for the month, in a slowdown from July’s 12.7 per cent gains. The latest showing on Friday also missed private-sector analysts’ median forecast of 8.5 per cent expansion in a Bloomberg poll.
Trade agency Enterprise Singapore (ESG) attributed the muted growth to a year-ago high base, with NODX dragged down by a decline in non-electronic shipments despite continued expansion in Singapore’s linchpin electronics cluster.
Nomura economists Euben Paracuelles and Charnon Boonnuch added in a note that “the negative surprise to our forecast was mainly driven by pharmaceutical exports”, a typically volatile segment that swung into negative territory for the month.
Non-electronic NODX reversed a 12 per cent rise in July to shrink by 1.4 per cent in August, with non-monetary gold – a safe-haven asset in the year before – losing lustre.
That is as gold shipments came off a high base, which ESG attributed to both a year-on-year drop in prices and how “the recent rally in global stocks reduced the need for diversification against a weaker dollar and yields”.
Even so, electronics NODX continued the cluster’s winning streak with 16.7 per cent growth in August – up from 15 per cent in July – in an expansion that ESG noted was driven mainly by integrated circuits “amid robust global semiconductor demand”.
On a seasonally adjusted, monthly basis, overall NODX was down by 3.6 per cent to S$15.5 billion, deepening from the dip of 0.9 per cent in July.
NODX to eight of the Republic’s top 10 markets rose year on year , despite double-digit declines in exports to China and the European Union.
Shipments to key destinations were fuelled by export demand for integrated circuits and other electronics products, from markets such as Taiwan, Hong Kong and Malaysia.
Meanwhile, NODX to emerging markets rose by 2.6 per cent in August, moderating from 59.8 per cent in the month prior, with demand from South Asia; the Cambodia, Laos, Myanmar and Vietnam region; and the Middle East.
Overall, total trade grew by 19.8 per cent year on year, compared with 19 per cent in July, on increases in both exports and imports. “Total trade growth in August 2021 reflected the increase of both oil and electronics trade,” ESG said in its report, citing both a year-on-year rise in oil prices, as well as “strong global semiconductor demand”.
Said the Nomura team: “Despite weaker-than-expected NODX growth in August, we maintain our 2021 GDP (gross domestic product) growth forecast at 7.1 per cent in 2021… We continue to expect the global tech upcycle to support electronics exports, given the strength of external demand, as highlighted by our tech analysts based on latest comments from tech companies.”
UOB economist Barnabas Gan added: “The expansion in August’s NODX was against a relatively higher base a year ago, underlining the robust demand for semiconductors and higher oil prices. We believe that Singapore’s external-facing industries will benefit from the continued recovery of the global trade wind, while higher commodity prices may provide the fillip to overall export value ahead.”
Source: https://www.businesstimes.com.sg/government-economy/singapore-export-growth-cools-to-27-in-august-despite-support-from-electronics