Narrowed Decline Reflects Ongoing Challenges but Potential Recovery on the Horizon
In October 2023, Singapore’s non-oil domestic exports (NODX) experienced a 3.4% year-on-year decline, continuing the easing trend observed in recent months, according to data released by Enterprise Singapore. While this marks the third consecutive month of contraction, the decrease is significantly smaller than the 13.2% drop recorded in September, and it surpassed expectations, with economists initially forecasting a 6% fall. Despite the ongoing decline, the NODX figures offer some hope for a recovery in the upcoming months, with experts citing a combination of seasonal base effects and signs of stabilization in the global electronics cycle.
The more moderate decline in October comes after a prolonged period of contraction, which has primarily been driven by weaker exports in the electronics and non-electronics sectors. The overall figures point to a gradual easing in the negative trend, with economists suggesting that NODX could return to positive growth in the coming months, particularly due to the low base of comparison from October 2022.
Economists from DBS and Maybank share an optimistic outlook, predicting that NODX may see a return to positive growth as soon as November or December. They expect that the low comparative base of 2022 will continue to provide a boost to exports in the near term, although full-year forecasts for NODX remain in negative territory, with OCBC’s chief economist, Selena Ling, projecting a 12.5% drop for the year.
On a month-on-month seasonally adjusted basis, NODX grew by 3.4% in October, extending the 11.1% growth seen in September. This uptick marks an encouraging development, as both electronics and non-electronics exports saw a rise. While the monthly increase is positive, the value of NODX still lags behind the previous year, with October 2023’s S$15 billion lower than the S$15.8 billion recorded in October 2022.
Within the electronics sector, which has faced significant challenges, exports continued to decline, down by 5.6% year-on-year in October. This marks the 15th consecutive month of shrinkage in electronics exports, although it represents an improvement over the 11.6% contraction observed in September. Key electronics components such as integrated circuits, diodes, and parts of PCs experienced the most significant declines, contributing to the overall dip in the sector.
The non-electronics sector also faced a decline, though it showed signs of improvement. Non-electronics shipments fell by 2.7% in October, a smaller drop compared to the 13.7% contraction in September. The categories contributing most to this decline included food preparations, non-electric engines, and electrical machinery.
Despite these challenges, exports to certain regions performed well. There was a noticeable increase in exports to China, which rose by double digits for the second consecutive month, signaling a possible recovery in the Chinese economy. However, NODX to Taiwan, the United States, and South Korea declined, reflecting weaker demand from some of Singapore’s top export markets.
The broader trade picture for Singapore also showed some positive signs in October. Total trade rose by 0.3% year-on-year, reversing the steep 12.5% contraction recorded in September. Similarly, total exports grew by 2.8%, following a 12.8% decline in September. However, total imports fell by 2.3%, showing continued weakness in the demand for goods from abroad.
Overall, Singapore’s trade figures suggest that while the recovery of its non-oil domestic exports remains gradual, there are encouraging signs of stabilization and potential growth in the coming months. With global electronics demand potentially reaching a bottom, NODX growth could see positive territory by the end of the year, supported by low comparative figures from 2022.
