Exports buck gloom and bounce back

January NODX numbers show 2.8% growth to reverse decline in December



The year got off to a good start on the trade front - key non-oil domestic exports bounced back from a year-on-year 4.5 per cent decline in December 2007 to grow 2.8 per cent to $15.4 billion in January.

The upturn came as a surprise, with the market expecting a 5.7 per cent contraction in the NODX. But the increase was still below the 4-6 per cent jump the government's trade promotion arm, International Enterprise Singapore, has projected for the full year.

Still, it was good news for some. 'After several months of disappointment, this finally provided an upside export surprise,' said Robert Prior-Wandesforde, an economist at HSBC Bank. He sees exports making a 'positive contribution' to gross domestic product growth in the first quarter.

UOB Bank's Ho Woei Chen is more cautious about the outlook. 'The out-performance against our forecast was mainly due to the expansion in petrochemicals NODX, which helped offset a decline in pharmaceutical shipments, as well as a less-than-expected fall in electronics NODX.'

Electronics shipments, which make up over 40 per cent of total NODX, continued to remain in negative territory. They declined for a 12th straight month, dipping 1.8 per cent - though this was a smaller fall than in the previous two months when electronics NODX slid 8-9 per cent.

The growth in the NODX in January was provided mainly by non-electronics exports, IE Singapore said yesterday when it released the latest numbers. Non-electronics NODX picked up speed from 0.8 per cent growth in December to rise 6.2 per cent last month in January.

'Surprisingly, the better-than-expected out-turn didn't reflect the long-awaited pharmaceutical bounce,' Mr Prior-Wandesforde said. 'In fact, pharmaceuticals saw a 26.7 per cent year-on-year drop - the third consecutive contraction and the biggest of the three.'

According to IE Singapore, growth in non-electronics NODX was supported by higher domestic exports of measuring instruments, non-monetary gold, disk media products and petrochemicals.

The unexpected fall in overall NODX in December, after a 3.4 per cent drop the month before, meant a smaller base for a month-on-month increase. So the seasonally adjusted 8.4 per cent jump in January from December was overblown.

Total trade grew a creditable 19 per cent year-on- year to $80.92 billion last month, after a 5.8 per cent gain in December. Total exports were up 14 per cent, and total imports 26 per cent.

Domestic exports to the top three markets - the European Union, the US and Malaysia - fell in January. The top contributors to the NODX gain were Hong Kong China and South Korea.

HSBC's Mr Prior-Wandesforde noted that exports to 'emerging markets' rose 16.4 per cent year on year.

'This supports the argument that Singapore and Asian exports more generally can hold up despite weakness in the developed world,' he said. 'The US is not the be-all and end-all for Asia that so many believe it is.'

But UOB's Ms Ho believes final demand is still driven by the US and EU. 'As such, we remain concerned if the US economy should slip into a more protracted downturn,' she said.