SINGAPORE: Singapore’s non-oil domestic exports (NODX) are poised to close 2023 on a sombre note. Chief Economist and Head of Global Markets Research and Strategy at Oversea-Chinese Banking Corporation, OCBC Selena Ling, says Singapore’s NODX for 2023 is on track to see its worst annual performance since 2001, The Edge Singapore reports.
Ms Ling anticipates a year-end contraction of -12.5%, aligning with the lower end of Enterprise Singapore’s projected range of -12.5% to -12.0%. Ms Ling’s outlook assumes a modest recovery in December NODX to 5.9% year-on-year.
November saw a glimmer of hope for Singapore, as Singapore’s NODX recorded 1% growth, breaking a streak of 13 consecutive months of contractions. However, UOB’s Senior Economist Alvin Liew and Associate Economist Jester Koh expect the full-year NODX to contract slightly more at -12.6%, down from their earlier estimate of -12.5% and below Enterprise Singapore’s projected range.
Concerns about the sustainability of the recent improvement in the external sector linger. Oxford Economics’ Lead Asia Economist, Alex Holmes, stated, “The question now is whether this represents a temporary or extended pause in the external sector’s recent better trend. We suspect it will be the latter.”
He added, “A renewed growth spurt looks unlikely against the background of waning of global growth, with advanced economies growing sluggishly – or stagnating – as the adverse impact of past policy tightening builds.”
The electronic NODX declined by 12.7% year-on-year in November, with integrated circuits, personal computers, and diodes & transistors contributing the most to the drop. Non-electronic NODX, however, showed a positive trend, growing by 5.2% year-on-year, driven by pharmaceuticals, non-monetary gold, and miscellaneous manufactured articles.
The decline in NODX to various markets in November was widespread, with notable drops in Taiwan (-40.0%), the EU 27 (-21.7%), and Indonesia (-23.6%). However, NODX to the US, China, Thailand, and Hong Kong experienced a positive upswing.
Analysts from UOB observe that November’s figures may indicate a potential bottoming in the electronics trade cycle, with expectations of a recovery in the coming quarters. They point to a narrowing contraction in electronics NODX on a six-month moving average year-on-year basis.
Looking ahead to 2024, Selena Ling expresses optimism, anticipating a turnaround in the demand for global electronics.
Ling’s NODX forecast for 2024 ranges between 4% to 6%. She stated, “[This is] as the global monetary policy cycle pivots to an easing bias and assuming that geopolitical tensions do not worsen.”
UOB’s Liew and Koh are even more optimistic, predicting a 6.0% expansion in 2024, surpassing the official range of 2.0% to 4.0%. They stated, “In 2024, recovery in NODX will largely be driven by base effects given the sharp double digits y-o-y decline seen from November 2022 to September 2023 but headwinds persist given the still weak external backdrop on tight financial conditions stemming from an elevated interest rate environment.”
However, not all experts share this positive outlook. Oxford Economics’ Holmes remains cautious, citing a slowing global growth scenario and the adverse impact of past policy tightening, which could impede Singapore’s exports from providing a substantial boost to GDP in 2024. /TISG