Flash Notes

Singapore’s non-oil domestic exports (NODX) gained for the 5th consecutive month and expanded 16.5% y/y in March,surprising consensus expectations of a 7.3% y/y gain. The expansion follows from the 21.1% y/y growth in February, whichwas then the fastest rate of growth in 5 years. On a m/m SA basis, NODX fell 1.1%, a reversal of the 1.1% growth in January.

    The improvement in March NODX was due to gains in both the electronic and non-electronic exports. Electronic exportsexpanded 5.2% y/y, following the 17.2% y/y expansion in February. This is the 5th month of expansion after a previous 8-monthcontraction. The expansion in electronics exports in March was contributed by gains in the exports of ICs (+7.8% y/y), parts ofPCs (+33.9% y/y), and consumer electronics (+29.9% y/y).

    Non-electronic NODX in March expanded 20.8% y/y, following the 22.7% y/y expansion in February. The strong performancewas due mainly to a jump in the exports of petrochemicals (+42.8% y/y), specialized machinery (+70.1% y/y), and structural partsmade of iron, steel & aluminum (+4697.5% y/y).

    In March, NODX to Singapore’s top 10 markets expanded. The largest contributor to the NODX expansion were China (+45.5%y/y, mainly from the exports of non-monetary gold, petrochemicals, and disk media products), Taiwan (+32.5% y/y, mainly fromthe exports of specialized machinery, measuring instruments, and petrochemicals), and Hong Kong (+17.4% y/y, mainly from theexports of non-monetary gold, parts of PCs and electrical machinery).

    A special note on oil domestic exports. In March, oil domestic exports grew 68.5% y/y, the 7th consecutive month of expansion,following a 24-month decline previously. Higher oil prices helped to push up the nominal oil exports and higher sales in Marchwere to China (+238.5% y/y), Australia (+210.1% y/y), and Hong Kong (+110.5% y/y).

    Non-oil re-exports (NORX), a gauge on the regional/global trading sentiments, grew 9.4% y/y in March, following the 9.4%y/y expansion in the previous month, due to a rise in both electronic and non-electronic NORX. On a m/m basis, NORX declinedslightly by 0.2%, reversing from a 2.1% y/y growth in February.

    Looking ahead, overall NODX expansion remains strongly supported by electronics exports. The 5-month on-year gains inelectronics exports was a result of past months of higher manufacturing activities and inventory accumulation in the semiconductorsegment (semiconductor production was on a 12-month streak of double digit expansion). In addition, the past 8 months ofexpansion (after an 18-month consecutive decline) in the new export orders for electronics PMI points to a more sustained pickupin Singapore’s electronics exports at least in 1H 2017.

    Indeed, past few months of trade pickup looks set to bring Singapore’s 2017 NODX to finally expand, after recording 4previous years of contraction. That said, we are carefully watching the negative impact from the anti-globalisation rhetoric thathas been fueling developed markets’ sentiments. One country to watch out is still the US. In a paper by the Ministry of Trade andIndustry, the US is the 2nd largest source of final demand of the goods produced in Singapore and further trade-protectionisticmeasures will only hurt the path of our export recovery.

    IESingapore (the trade agency) had their forecast for NODX to grow 0% to 2% in 2017, while maintaining their forecastfor total merchandise trade to expand 4% to 6%, while we maintain our forecast of 2017 NODX growth at 0.7%.