SINGAPORE - Singapore expects growth in key exports to come in at 4 per cent to 5 per cent in 2024 – the lower end of its forecast range of 4 per cent to 6 per cent.
This comes as non-oil domestic exports (Nodx) fell 6.4 per cent in the second quarter of 2024 on the back of volatile pharmaceutical demand, faster than the 3.4 per cent decline in the previous quarter.
For the second half of 2024, support for Nodx is expected to come largely from the electronics recovery, driven by demand for artificial intelligence (AI) servers and consumer devices, Enterprise Singapore said on Aug 13.
The trade agency noted that the International Monetary Fund projected the global economy would grow by 3.2 per cent in 2024. Most of Singapore’s key trade partners, including China, the United States, Europe and Asean, are projected to grow in 2024.
“Key downside risks remain for the Nodx forecast, including a weaker-than-expected recovery in the second half of 2024, which could potentially lead Nodx growth for the year to come in below the forecast range,” it added.
Compared with a year earlier, domestic exports of electronic products grew by 3.8 per cent in the second quarter of 2024, reversing a 1.6 per cent decline in the first three months of 2024.
Personal computers, integrated circuits and other computer peripherals contributed the most to the growth in electronics shipments. Integrated circuits, or semiconductors, which formed about half of electronics Nodx, grew by $300 million, the second quarter of growth after six straight quarters of decline.
DBS Bank economist Chua Han Teng said that Singapore’s ongoing electronics recovery is expected to benefit overall Nodx.
“Singapore’s electronics shipments will see positive spillovers from the ongoing global tech-cycle upturn... Global tech demand is expected to be supported by the replacement of smartphones and personal computers, as well as the broadening use of AI applications,” Mr Chua said.
Domestic exports of non-electronic products declined by 9.2 per cent in the second quarter, following the 3.8 per cent drop in the previous quarter. The largest contributors to the decline in non-electronics Nodx were pharmaceuticals, non-monetary gold and food preparations.
Shipments to the key markets of Europe, the US and Japan declined in the second quarter.
OCBC Bank chief economist Selena Ling noted that domestic demand conditions in these three major trading partners are still weak, but Nodx to Asean countries generally recovered in the first half of 2024.
Ms Ling said that “front-loading” may occur ahead of the US election in November, with exporters shipping larger quantities to beat potential tariffs. If these tariffs do not materialise, a pullback in Nodx could occur in the first half of 2025.
“Overall, Singapore’s Nodx growth is still seeing a soft recovery this year,” she added.
Enterprise Singapore said that the outlook for total trade remains “cautiously optimistic” with support from high oil prices.
Total merchandise trade, which includes oil, expanded by 10.1 per cent in the second quarter of 2024, building on the 4.8 per cent growth in the first three months of the year.
Oil trade, which formed 20 per cent of total merchandise trade in the second quarter of 2024, grew by 16.9 per cent, after the 3.4 per cent growth in the first quarter.
Non-oil trade rose by 8.5 per cent, following the 5.2 per cent growth in the previous quarter.
DBS’ Mr Chua said there are ongoing uncertainties that could keep the improvement in Singapore exports fragile.
“One uncertainty is ongoing geopolitical conflicts that could disrupt supply chains, with port congestion already occurring from the re-routing and diversion of vessels from the Red Sea,” he said.
“Another uncertainty is China’s uneven economic growth and the impact on the US economy from high interest rates.”
In the second quarter of 2024, Singapore’s economy grew 2.9 per cent, primarily driven by the wholesale trade, finance and insurance, and information and communications sectors.
