Singapore’s NODX posts surprise contraction in February, biting the Singapore dollar

Singapore one dollar bill

Singapore’s non-oil domestic exports (NODX) contracted in February, confounding analysts’ expectations for growth.

NODX fell 5.9 percent on-year in February, but that followed 12.9 percent growth in January and much of 2017, International Enterprise Singapore said in a release on Friday. Both electronics and non-electronics segments contributed to the decline. Bloomberg’s consensus forecast was for 4.8 percent growth on-year.

The release said that electronic NODX fell for a third month after growing for much of 2017, while non-electronics NODX fell after growing for eight straight months.

On a month-to-month seasonally adjusted basis, NODX was down by 2.6 percent in February, as non-electronics exports declined.

The Singapore dollar fell in the wake of the data.

The U.S. dollar was fetching as much as S$1.3163 after the release, compared with levels around S$1.3140 before the data. But by 11:19 A.M. SGT, it was trading at S$1.3149, according to Bloomberg data.

Lunar New Year bite

But Alvin Liew, senior economist at UOB, noted that the main  drag was a contraction in exports to China, which were down more than 20 percent, which he said was likely due to the Lunar New Year holidays. That was also the likely culprit for declines in exports to many of Asia’s largest economies, he said.

Liew noted that despite the Lunar New Year holiday, NODX for the combined January-to-February period still managed to grow by 3.6 percent on-year.

“It also confirmed our long-held view that the very strong on-year growth rates in exports for most of the past year may moderate as the high base effects kick in into 2018,” Liew said in a note on Friday.

Mixed outlook

UOB was sticking with a forecast of 6.5 percent NODX growth this year, down from 8.8 percent in 2017.

But Liew pointed to a mixed outlook for the city-state’s key export trade.

“A positive for Singapore’s trade outlook is China’s managed growth slowdown that will still be supportive of export demand from Singapore,” he said. “But a bigger downside risk to the trade outlook is that the U.S.’s increasingly protectionist trade stance (the expected imposition of further trade tariffs on China after the steel and aluminum imports tariffs in March) could lead to a spiraling trade war, negatively impacting global trade and inevitably, Singapore’s exports.”

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