Singapore: October exports surge 17.9% to race past forecasts; global chip demand a driving force

SINGAPORE exports rose for the 11th straight month in October, driven by non-monetary gold, specialised machinery and petrochemicals, though electronics shipments also remained strong.

Non-oil domestic exports (NODX) growth jumped by 17.9 per cent year on year, up from the 12 per cent expansion in September and also ahead of the median estimate of 15.1 per cent in a private Bloomberg poll.

Electronics NODX rose by 14.9 per cent, against 14.1 per cent in September, data from government agency Enterprise Singapore (ESG) showed on Wednesday (Nov 17).

The agency attributed the continued growth to exports of integrated circuits, “amid robust global semiconductor demand”.

Meanwhile, non-electronics shipments expanded by 18.9 per cent, compared with 11.4 per cent in the month before. Non-monetary gold and petrochemicals clocked increases on a year-ago low base, while ESG noted that the rise in specialised machinery exports was “in line with robust global semiconductor demand”.

On a seasonally adjusted, month-on-month basis, NODX increased by 4.2 per cent, up from 1 per cent in September, to hit S$16.4 billion.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye have raised their full-year NODX growth forecast to 11 per cent in 2021, from 9 per cent before, although they expect headline growth to slow to between 5 per cent and 7 per cent in 2022 on a high base for electronics shipments.

Semiconductor prices have softened and the wait time to deliver may be peaking, they said, while adding: “Both electronics and non-electronics will likely continue to grow at healthy rates in 2022 on the back of sustained demand for chips and related equipment, and petrochemicals.”

Oxford Economics senior economist Jung Sung Eun separately told The Business Times (BT) in an email: “We expect electronic exports to remain strong in 2022 given the semiconductor upcycle.

“While we expect bursts in non-monetary gold to be transitory, exports of specialised machinery and transport equipment could pick up further as businesses normalise and investment improves next year.”

Still, Alvin Liew, senior economist at UOB, added: “October’s NODX expansion was broad-based, driven by both electronics and non-electronics exports, and continues to provide an important pillar to support overall economic growth.”

Driven by higher demand from mainland China, Malaysia and Taiwan, NODX rose year on year to 7 of the Republic’s top 10 markets, albeit with declines in shipments to Thailand, the United States and Hong Kong.

Meanwhile, NODX to emerging markets grew 42.5 per cent, mainly on demand from the Cambodia, Myanmar, Laos and Vietnam region, South Asia, and the Middle East.

Non-oil re-exports, a proxy for the wholesale trade industry, grew by 17.8 per cent year on year in October, against 16.4 per cent the month before.

Overall, total trade rose by 24 per cent, compared with 18.6 per cent in September, with increases in both exports and imports. ESG attributed the growth to higher oil and electronics trade.

Said Nicholas Mapa, senior economist at ING: “October’s NODX growth benefited from the low base recorded in 2020 while also getting a hefty boost from the outsized jump in petrochemical shipments.

“Given the start-stop nature of the global recovery, the year-on-year changes remain volatile and susceptible to further swings in the months ahead. Nonetheless, the strong showing for October NODX points to an upbeat outlook for fourth-quarter gross domestic product.”

But Jung added that export growth “will be driven more by services rather than goods” in 2022.

“A real-estate led slowdown in China’s growth and ongoing global supply chain disruptions continue to pose challenges to global goods trade,” she said in a report.

She later told BT: “Our 2022 service export forecast is mainly driven by a rebound in travel industry from a very low base.  We expect transport and travel sectors will pick up from Q4 onwards with significant border reopening in recent months. We forecast that real service exports will return to pre-pandemic level by end-2022.”