SINGAPORE: Singapore’s non-oil domestic exports rebounded in February, climbing by a better-than-expected 9.1 per cent on a year-on-year basis beating expectations of a 7.8 per cent rise according to economists surveyed.
The rebound in exports last month did not come as a surprise to economists mainly because Lunar New Year fell in late January this year, compared to February in 2013.
Overall, Singapore’s non-oil domestic exports increased by 9.1 per cent last month, compared to the 3.3 per cent decrease in January.
However, electronics sector remained weak with exports contracting by 3.7 per cent. This is on top of the 17 per cent decline in the previous month.
According to data released from IE Singapore, the drag was due to a drop in ICs, disk media products and PC parts.
However, non-electronics exports gained pace, expanding by 15.4 per cent, up from the 3.5 per cent increase in January.
This was led by petrochemicals (up 49.3 per cent), pharmaceuticals (up 21.8 per cent) and printed matter (up 57.1 per cent).
Robert Prior-Wandesforde, head of India and Southeast Asia economics at Credit Suisse, explained: “On the petrochemical side, we are seeing structural improvement because of the beginning of some new plants. The Exxon Mobil ethylene-cracker plant has led to a surge in output there.”
He added: “In terms of sectors, I suspect electronics will suffer further. The whole industry is suffering from weak demand because Singapore is not particularly strong in those areas where demand is best, particularly the smartphones and tablet areas so it is losing out to a certain extent from that.”
Indeed, experts say Singapore exports will likely lag behind its North Asian neighbours who are more plugged into mobile device manufacturing.
Although there has been a modest improvement in the global economy, two of Singapore’s major trading partners – the US and Europe – are still not generating huge domestic demand.
Analysts say the large firms in these two economies must increase capital expenditure and expand IT budgets before a substantial impact can be seen in Singapore’s export numbers.
Others warn of challenges closer to home.
Leong Wai Ho, senior regional economist at Barclays, said: “One concern that we have is the prospect of weaker demand in Southeast Asia. We’ve seen higher interest rates in Indonesia and political cycles kicking off in Indonesia and Thailand so that might be a factor that could constrain domestic demand going ahead.”
For 2014 as a whole, some economists expect NODX growth of between 5 to 7 per cent.
Singapore"s NODX up 9.1% in Feb, beating expectations
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