NODX to the top markets as a whole declined in August, although NODX to Indonesia rose, said EnterpriseSG.
The largest contributors to the decline in NODX were the US (-32.4 per cent), the EU (-28.9 per cent) and China (-16.4 per cent). NODX to Indonesia grew by 33.2 per cent.
NODX to Indonesia increased from the 11.2 per cent expansion in July mainly due to non-electronics NODX, which rose 24.5 per cent year-on-year, said Ms Ling.
“NODX to Indonesia is weighted towards chemical and chemical products,” she added.
Mr Liew said the return to “such a sharp decline” for the US was “especially worrying”, given that it had previously recovered strongly by more than 30 per cent in July.
“The continued slide in the export numbers to China (puts) the spotlight on China’s weak domestic demand conditions and in turn, further uncertainty about China’s economic recovery,” he added.
Ms Ling said that a Reuters article flagged that TSMC had reportedly told its major suppliers to delay deliveries of high-end chipmaking equipment because of concerns about customer demand.
“While this is unlikely to significantly influence the MAS monetary policy decision coming up in early October where we anticipate no change in policy settings given still elevated core inflationary pressure, any further delay in the electronics global cycle turnaround is likely to have spillover impact into the downside growth risks for the first half of 2024, which coupled with the currently weak growth footing of the Chinese economy, could warrant a stronger fiscal stance at the Budget 2024,” she added.
Mr Liew said the decline in NODX to top markets weighs negatively on the trade outlook.
“We therefore maintain our call to expect sustained weakness in global demand amid an ongoing electronics downcycle, which we think has yet to find a bottom,” he added.
On a year-on-year basis, total trade declined by 15.2 per cent in August, following the 20.9 per cent contraction in the previous month.
Both exports and imports fell, by 14.7 per cent and 15.6 per cent respectively.
Overall, Singapore’s export outlook remains troubled, said Mr Liew, adding that he expects NODX to contract “for a few more months” before improving in the later part of the year.
For the first eight months of 2023, NODX has contracted by 16.2 per cent year-on-year.
UOB is forecasting NODX to contract by 15 per cent in 2023, down from the previous forecast of 10 per cent. This is “well exceeding” the lower end of the government’s revised NODX forecast range of -10 per cent to -9 per cent.
“Unless there is a sharp trade recovery in late 2023, the current NODX contraction trajectory will easily tip the full year 2023 decline well beyond the official -10% threshold,” said Mr Liew.
Ms Ling said that OCBC’s baseline “remains no technical recession for the Singapore economy in the second half of 2023”, but added that the “persistent soft patch in external demand conditions” implies some “downside risk” to the third quarter of 2023 NODX forecast of -16.3 per cent year-on-year and in turn the manufacturing performance in the third quarter.
OCBC is forecasting NODX to contract by at least 11 per cent in 2023, “even with gradual improvement for the remaining months”, said Ms Ling.
“If this materialises, this would potentially mark the worst annual NODX performance since 2001 (-14.5 per cent year-on-year),” she added.
Last month, Singapore narrowed its growth forecast for 2023. The Ministry of Trade and Industry (MTI) said the country’s gross domestic product for the year is expected to come in between 0.5 per cent to 1.5 per cent, narrowing from the previous 0.5 to 2.5 per cent range.
In its quarterly assessment, MTI said it sees a “weak” external demand outlook for the rest of the year.
Earlier this month, private sector economists cut their forecast for Singapore’s economic growth this year to 1 per cent, down from an earlier projection in June of 1.4 per cent.
Prime Minister Lee Hsien Loong said on Sep 7 that Singapore will not see a recession this year despite a sluggish economy, although uncertainty remains for 2024.
