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Singapore’s trade ‘not materially affected’ by global supply chain disruptions: MAS
SINGAPORE’S trade does not seem to have been materially affected by disruptions in global and regional supply chains, judging by its “relatively resilient performance” in the pandemic, the Monetary Authority of Singapore (MAS) said in its latest Macroeconomic Review on Oct 28.
“On the whole, domestic manufacturers have not been significantly affected by supply constraints thus far, although some firms have experienced intermittent delays in the shipments of raw material supplies and higher freight costs due to port congestions and a global shortage of vessels,” it said.
The MAS noted that in Singapore’s manufacturing purchasing managers’ index, the supplier’s delivery time index has been relatively stable, in contrast to delays seen in other Asian markets.
Though non-oil retained imports (NORI) fell by 1.5 per cent in 2020 and 0.1 per cent year on year in the first three quarters of 2021, NORI of intermediate goods posted “robust growth” in the first half of 2020 at the height of the pandemic. NORI of non-intermediate goods – that is, consumption and capital goods for final demand – have picked up in recent quarters.
The MAS identified two plausible reasons why Singapore has been less affected by supply chain disruptions. First, the manufacturing sector here is more concentrated in upstream activities. As production bottlenecks tend to arise in later stages of the supply chain, they are therefore less likely here.
Second, Singapore’s imports of intermediate goods are quite well-diversified geographically, suggesting that there is a broad range of intermediate suppliers to draw upon in the event of a disruption.
“The ongoing shortage of semiconductors should not significantly affect domestic manufacturing activity, as Singapore does not produce cars or other end-consumer electronics products that rely heavily on chips,” said the MAS.
In general, Singapore’s trade in goods was less affected by Covid-19 than its trade in services.
The start of the pandemic saw a temporary sharp decline in global trade, with Singapore’s trade in services bearing the brunt of this.
At its lowest point in Q2 2020, Singapore’s trade in goods was about 20 per cent below its average 2019 levels, but had recovered to pre-Covid levels by Q4 that year.
Trade in electronics stayed robust and has been a major driver of overall trade growth in 2021, with electronics exports and imports rising 25 per cent and 20 per cent year on year, respectively, in the first three quarters.
In contrast, services trade “has not risen substantially from the trough” and remains 15 per cent below pre-pandemic levels as at Q2 2021, “reflecting weakness in transport and travel services amid movement and border restrictions”.
Source: https://www.businesstimes.com.sg/government-economy/singapores-trade-not-materially-affected-by-global-supply-chain-disruptions-mas