20180618-大华银行-Macro_Note_3页_244kb

Singapore: Surge in May Exports Despite Weaker Electronics

Core Content

Singapore's non-oil domestic exports (NODX) experienced a significant increase in May 2018, with a year-over-year (y/y) growth of 15.5%, surpassing both the previous month's growth of 11.8% and the Bloomberg median forecast of 3.0%. On a month-over-month (m/m) seasonally adjusted (SA) basis, NODX expanded by 10.3%, up from 6.5% in April. This growth was driven primarily by the non-electronic exports segment, which grew by 26.2% y/y, offsetting the continued decline in electronics exports.

Main Points

• Non-Electronic Exports Growth:
  The non-electronic segment was the key driver of NODX growth in May. Major contributors included:

  • Civil engineering equipment parts (growth not specified)
  • Food preparations (+132.7% y/y)
  • Pharmaceuticals (+32.1% y/y)

• Electronics Exports Decline:
  Electronics NODX continued to decline for the 6th consecutive month, with a y/y drop of -7.8% in May. The most significant contributors to this decline were:

  • Parts of PCs (-37.5% y/y)
  • ICs (-8.5% y/y)
  • Diodes & transistors (-19.0% y/y)

• Market Performance:
  Exports to certain key markets showed strong growth, helping to offset declines in others:

  • Japan (+14.8% y/y)
  • EU 28 (+97.5% y/y)
  • US (+54.0% y/y)
  • Declines were observed in exports to South Korea, China, Malaysia, Taiwan, and Thailand.

• Oil Exports and Re-exports:

  • Oil domestic exports grew by 17.8% y/y in May, marking the 21st consecutive month of expansion due to higher oil prices.
  • Non-oil re-exports (NORX), a key indicator of regional and global trade sentiment, rose by a slower +4.0% y/y, down from +8.2% in April.

• Outlook for 2018:
  Despite the strong May performance, the author does not upgrade the NODX outlook for 2018. The reasons include:

  1. Pharmaceutical exports saw a 2-month surge, which is known for its volatility.
  2. Base effects are starting to impact the electronics sector negatively.
  3. Escalating US-China trade tensions and broader US trade concerns pose a risk to Singapore's trade-dependent economy.

• Forecast for 2018:
  The author maintains a forecast of 6.5% growth for NODX in 2018, which is slower than the 8.8% growth in 2017. The strong growth in April and May is unlikely to be sustained into the second half of the year.

Key Information

• NODX Growth:

  • May 2018: +15.5% y/y, +10.3% m/m SA
  • April 2018: +11.8% y/y, +6.5% m/m SA
  • January–May 2018: +6.2% y/y

• Electronics NODX:

  • May 2018: -7.8% y/y
  • April 2018: -6.9% y/y
  • January–May 2018: -7.7% y/y

• Non-Electronics NODX:

  • May 2018: +26.2% y/y
  • April 2018: +19.6% y/y
  • January–May 2018: +11.8% y/y

• Other Sectors:

  • Chemicals: May 2018: +19.9% y/y, January–May 2018: +10.2% y/y
  • Pharmaceuticals: May 2018: +32.1% y/y, January–May 2018: +9.4% y/y
  • Petrochemicals: May 2018: +14.8% y/y, January–May 2018: +4.5% y/y

• Trade Dependencies:
  Singapore's economy is highly reliant on trade, and external factors such as US-China trade tensions are expected to influence its export performance in the coming months.

Conclusion

While Singapore's May exports showed a surprising surge, the underlying trends suggest caution. The growth in non-electronic exports, particularly in pharmaceuticals and food preparations, was a key factor, but the ongoing decline in electronics exports and global trade uncertainties temper optimism for sustained growth in 2018. The forecast for NODX growth remains at 6.5% for the year, reflecting a more cautious outlook.