Singapore: NODX moderated the decline in February – UOB

Senior Economist at UOB Group Alvin Liew reviews the latest performance of the non-oil domestic exports (NODX) in Singapore.

Key Takeaways

“Singapore’s non-oil domestic exports (NODX) continued to fall, albeit less sharply by -15.6% y/y in Feb (from -25.0% y/y in Jan), the fifth straight month of contraction after 22 months of unabated expansion. On a seasonally adjusted sequential basis, NODX fell sharply by -8.0% m/m in Feb (compared to +0.9% m/m gain in Jan), the deepest m/m fall since Sep 2020 (-9.2%). The nominal value of NODX fell further to S$13.0bn (S$13.3bn seasonally adjusted) in Feb, the lowest since Jun 2019.”

“Jan exports to major destinations continued to reflect the weak global demand backdrop, but there were some positive developments as 1) there were three markets (US, Japan and Thailand) reporting positive y/y outcomes in Feb versus two in Jan, 2) NODX to US returning to growth, at 8.7% (from -31.5% in Jan) and 3) while demand weakness persisted in China the magnitude of decline is much more moderate at -11.3% y/y (from -41.1% y/y in Jan), and similar moderation in demand weakness was seen in most of ASEAN (such as NODX to Malaysia which contracted -10.5% y/y vs. -23.5% y/y in Jan and NODX to Indonesia which declined by -2.0% y/y vs. -17.5% in Jan).”

“NODX Outlook – The broad-based weakness in both electronics and nonelectronics performance continues to weigh negatively on NODX momentum and manufacturing demand for Singapore. The improvement (in the form of less negative prints on NODX declines from major export destinations of China and the ASEAN region) is encouraging but we caution against prematurely calling this to be the start of an uptrend. We continue to expect weakness in global demand on the back of further monetary policy tightening and worries about economic slowdown in the developed markets. It should also be noted that high base effect will continue to work against the NODX in early 2023, as seen in the months of Jan and Feb. We keep our view that we are likely to see a few more months of y/y declines in NODX for 1H 2023 before factoring some improvement in the second half of the year. We still expect full year NODX to contract by 5.5% in 2023.”