Singapore’s domestic exports rose last month after three months of drops, with rising shipments to Singapore’s top 10 markets increasing, except for Japan, South Korea, the European Union and Indonesia.
Non-oil domestic exports (NODX) rose 4.9 per cent year on year in February driven by rising sales to China, Hong Kong and the US, reported Enterprise Singapore, a government agency. Analysts had forecast a fall in exports.
The figures were dominated by a 63-per-cent rise year on year in Singapore integrated circuits exports to Hong Kong.
“We may be seeing early signs of a trade diversion . . . now that the US and China are imposing tariffs on each other,” said Ju Ye Lee, a Maybank analyst, adding that a significant proportion of electronics exports to Hong Kong were re-exported to China.
She said Asean might be substituting US exports to China, although it was too early to conclude that.
The Chinese new year could have distorted the February figures and a turnround in the exporters’ fortunes might be premature, other analysts said.
Elsewhere, economists are looking to take advantage of the US-China rift.
Thailand’s National Economic and Social Development Council said last month that Donald Trump’s trade dispute would probably hurt Thai exports linked to China’s regional supply chain.
But it also said Thai exporters could still benefit from the trade dispute.
In Q4 2018, Thai exports of products included in the US and China tariff lists rose 4.8 per cent year on year, compared with a 1.1 per cent fall in exports of all other goods, according to Bangkok’s report.
Selena Ling, research chief at OCBC Bank, said she expected the rest of Singapore’s year to remain challenging, given the US-China trade dispute and declines in technology demand.
“For the full year of 2019, there is still downside risk for NODX growth which we believe could be flat to marginally negative on-year,” she said.
“March could provide a better reading of the underlying picture of NODX after the Jan-Feb volatility. Still, given that recent global growth forecast downgrades suggest rising business caution ahead amid a waning technology cycle, and recent economic data prints for China also remained mixed, there is little evidence to suggest that a turnaround in global demand is round the corner at this juncture,” Ling added.
The consensus seems to be that it is too early to draw conclusions from the February Singapore figures.
“We think this improvement is not something that will be sustained going forward,” said Charnon Boonnuch, an Asean specialist at Nomura. The “global tech downcycle” was still damping Asian exports, the analyst added.
Singaporean exports have had a volatile few months. Picture credit: Wikimedia