Singapore ups trade forecasts again as Q2 non-oil exports surge 10.1%

SINGAPORE (THE BUSINESS TIMES) – Singapore has raised its trade forecasts for the third time this year, on the back of strong second-quarter growth in sectors such as electronics and petrochemicals.

Non-oil domestic exports (Nodx) could grow by 7 per cent to 8 per cent year on year in 2021, trade agency Enterprise Singapore (ESG) said in a review on Wednesday (Aug 11) – a bump up from the projection of 1 per cent to 3 per cent issued in May.

And, with oil prices likely to stay high, total merchandise trade is now tipped to expand by 13 per cent to 14 per cent year on year, up from 5 per cent to 7 per cent in May.

Besides a better-than-expected showing in the year to date, ESG also pointed to “higher oil prices and robust global semiconductor demand” as drivers of total trade this year.

The rosier outlook came as Nodx was higher by 10.1 per cent in the April-to-June period, picking up from the 9.7 per cent rise in the first three months.

Exports were lifted by an 8.5 per cent increase in shipments of non-electronics, such as specialised machinery for semiconductors, petrochemicals and primary chemicals.

Still, the electronics cluster, which made up nearly one-quarter of Nodx, posted a fifth straight quarter of growth.

Electronics shipments were up by 15.7 per cent, on the back of personal computers, integrated circuits, and diodes and transistors.

Both total merchandise trade and Nodx have grown by more than expected in May, ESG noted, while citing the boost from electronics and related specialised machinery exports “amid robust global semiconductor demand”.

Petrochemicals are recovering from a global down cycle in 2019 and last year, while improved oil prices are “likely to support our oil trade in nominal terms, and in turn total trade in 2021” on strong demand and tight global supply, the agency added.

On a seasonally adjusted, monthly basis, Nodx was lower by 4 per cent – reversing the 17.7 per cent increase in the first quarter – on a decline in non-electronics.

Non-oil re-exports – a proxy for the wholesale trade sector – grew by 26.6 per cent year on year in the second quarter, up from 13.7 per cent in the three months prior, with help from higher shipments of electronics such as integrated circuits and telecommunications gear.

Overall, merchandise trade jumped by 27.3 per cent year on year – picking up from 4.9 per cent in the quarter before – as the oil trade returned to growth on higher prices.

The latest figures take Nodx growth to 9.9 per cent in the first six months of the year, while merchandise trade is up by 15.3 per cent.

Singapore’s total services trade increased by 9.3 per cent year on year to $124.6 billion, reversing the decline of 9.8 per cent in the quarter before. That is as exports returned to positive territory on growth in business, transport and financial services.

Said ESG in its quarterly review: “Merchandise trade is expected to lead growth by broadening from pandemic-related purchases, while services trade recovers more slowly due to subdued cross-border travel.”

Separately, the Ministry of Trade and Industry on Wednesday upgraded the full-year gross domestic product (GDP) forecast to between 6 per cent and 7 per cent, after the GDP expanded by a faster 14.7 per cent in the second quarter.

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