SINGAPORE: Singapore’s key exports saw an unexpectedly big jump in July, reversing a five-month slide as both electronics and non-electronics shipments grew strongly.

Non-oil domestic exports (Nodx) grew 15.7 % year-on-year (y-o-y) in July, compared with a revised 8.8% contraction in June and the 1.2% expansion forecast by economists in a Bloomberg poll.

Enterprise Singapore, which released the latest trade data on Aug 16, told The Straits Times that it remains “cautiously optimistic for the recovery going into the second half of the year” but that key downside risks remain, including global export recovery for the rest of 2024 coming in weaker than expected.

“We are continuing to monitor external developments closely and will adjust our forecasts as necessary,” it said.

The trade agency on Aug 13 had narrowed its 2024 Nodx forecast to 4% to 5%, the lower half of its earlier 4% to 6% projection.

But it said that July’s 15.7% Nodx growth “was in line with our expectations of an electronics recovery in the second half of 2024, driven by artificial intelligence (AI) servers and consumer devices”.

Enterprise Singapore said: “This comes against the backdrop of even stronger global chips sales of 19.2% for 2024, up from May’s forecast of 17.4% by Gartner.

“Closer to home, based on the latest business expectations survey, a net weighted balance of 36% of firms in the electronics cluster forecast new export orders for the third quarter of 2024.

“Overall, the above factors were accounted for in our recent forecast revision of 4% to 5% Nodx growth in 2024.”

Maybank economist Brian Lee said most private economists had expected a more gradual recovery in electronics, given port disruptions and lingering weakness in demand for industrial and automotive chips.

The surge in non-monetary gold exports helped to magnify Nodx growth in July, he said. Excluding this, Nodx growth would have been closer to 12 %, he noted.

On a month-on-month seasonally adjusted basis, Nodx expanded by 12.2% to US$15.4 billion in July 2024, after a 0.4% decline in June. This also topped the 2.2% rise tipped in the Reuters poll.

Total trade increased 13.7% in July, extending 1.2% growth in June as both exports and imports grew.

Electronics Nodx expanded by 16.5 % y-o-y in July, reversing the 9.5 % decline in June, underpinned by growth in integrated circuits or semiconductors, the largest component.

Enterprise Singapore noted Singapore’s electronics Nodx growth had broadened beyond integrated circuits - the largest component of electronics - to include disk media products and other computer peripherals.

The broadening of electronics shipment growth beyond integrated circuits is an encouraging signal that the electronics recovery is gaining traction, said OCBC Bank’s chief economist Selena Ling.

Non-electronics shipments expanded by 15.5% in July, after an 8.6% decline in June. Non-monetary gold, petrochemicals and specialised machinery contributed the most to the growth.

The United States, Malaysia and China were the largest contributors to the increase in shipments, while those to the European Union, Japan, Hong Kong and South Korea declined.

DBS Bank economist Chua Han Teng said Singapore exports are still on track for a gradual recovery on the back of better external demand.

“The recovery in Singapore’s electronics shipments is broadening, and we anticipate the ongoing electronics recovery to benefit overall Nodx,” he said.

 - ANN