NODX fell 20.7% y-o-y in March, but export decline doesn’t reflect global demand conditions

SINGAPORE: Singapore experienced a 20.7% year-on-year decline in non-oil domestic exports (NODX) in March. However, according to RHB Group Chief Economist, Mr Barnabas Gan, this export decline does not reflect global demand conditions.

Singapore Business Review reported that Mr Gan pointed out three key factors to consider. Firstly, while NODX took a hit, Singapore’s total exports accelerated in March. This uptick was mainly driven by increased outbound oil shipments, indicating a different story in the broader export picture.

The surge in total exports led to a trade surplus of S$5.5 million for the month, indicating positive growth prospects.

Secondly, he highlighted a specific reason for the decline in NODX: a shortfall in shipments of volatile components. This was particularly evident in pharmaceutical exports, which plummeted by a staggering 70.3% year-on-year.

Additionally, non-monetary gold exports dragged down NODX further. These fluctuations in specific sectors suggest that the overall growth dynamics of Singapore may not be accurately reflected in the current lacklustre export figures.

Lastly, Mr Gan pointed out the influence of a high base year in March 2023 on year-on-year growth comparisons.

This means the comparison with the previous year was inherently challenging due to the exceptionally strong performance in March 2023.

With NODX’s downward trend, RHB has revised its annual NODX forecast from 3.0% to 0.5%. On the other hand, UOB remains optimistic, projecting a 6.0% growth in NODX for the year.

UOB’s optimism stems from expecting a recovery supported by base effects, especially considering the sharp double-digit declines in electronics NODX from November 2022 to September 2023.

However, UOB also noted potential challenges in the near term. They pointed out that a sequential recovery might be difficult in the first half of 2024 due to tight financial conditions in the United States and the European Union.

Also, Nomura shared a positive outlook regarding the decline in electronic exports in March. They believe that this decline is likely to be short-lived. /TISG

Read also: OCBC: Singapore’s NODX on track to see worst performance since 2001