SINGAPORE - Enterprise Singapore on Nov 22 predicted a modest recovery for key exports in 2024 after lowering its forecast for 2023, given their worse-than-expected performance.
The trade agency now expects key non-oil domestic exports (Nodx) to shrink by 12 per cent to 12.5 per cent in 2023, compared with August’s forecast of a 9 per cent to 10 per cent contraction.
For 2024, Nodx is projected to rise by 2 per cent to 4 per cent in tandem with the anticipated turnaround in global electronics demand.
Enterprise Singapore (EnterpriseSG) noted that global electronics demand is projected to gradually recover in 2024, as inventory levels normalise. It said: “This would support total trade and Nodx growth.”
Total merchandise trade, which includes oil, is projected to shrink by around 10 per cent in 2023, narrowed from the August forecast of a 9 per cent to 10 per cent contraction. For 2024, it is forecast to expand by 4 per cent to 6 per cent with higher expected oil prices.
For the third quarter of 2023, Nodx fell 18.8 per cent year on year to $41.9 billion, extending the 13.4 per cent decline in the previous quarter, EnterpriseSG said in its latest quarterly trade review.
Electronics, which made up 20.9 per cent of Nodx in the third quarter, shrank 20 per cent, a slight improvement from the 22 per cent contraction in the previous quarter. Integrated circuits, disk media products and parts of personal computers contributed the most to the decline.
Non-electronics shrank 18.5 per cent, owing to lower exports of non-monetary gold, petrochemicals and structures of ships and boats. The decline was steeper than the 10.8 per cent fall in the previous quarter.
Nodx to Singapore’s top markets, except Hong Kong, dropped in the third quarter, with Taiwan and Indonesia contributing most to the decline.
Citing International Monetary Fund projections, EnterpriseSG said that among Singapore’s key trade partners, the euro zone and Asean will see growth pick up, while China, the United States and Japan are expected to expand slower than in 2023.
But it warned that headwinds in the global economy, including inflation, the Israel-Hamas conflict and the Russia-Ukraine war, could lead to renewed supply disruptions.
DBS Group Research economist Chua Han Teng noted that the trade slump is gradually recovering, but he also highlighted that lingering geopolitical tensions could disrupt supply chains.
He added that Singapore’s electronics exports are set to benefit from a “modest” turnaround in global semiconductor sales and medium-term optimism on artificial intelligence-related chips.
“Forward-looking indicators such as an improvement in new export orders of Singapore’s manufacturing purchasing managers’ index point to better days for overseas shipments,” he said.
In the third quarter, non-oil trade declined 14.1 per cent year on year to $247.2 billion, while total merchandise trade fell 16.4 per cent to $305.4 billion – a slight improvement from the 18.7 per cent slump in the second quarter of 2023.
Singapore’s oil trade in the third quarter, which formed 19 per cent of total merchandise trade, contracted 25.1 per cent year on year.
EnterpriseSG said: “For the rest of 2023, higher expected oil prices year on year should provide some support to oil trade in nominal terms, and in turn total trade.
“However, this is expected to be moderated by worse-than-expected year-to-date electronics and Nodx performance.”
