SINGAPORE – Singapore’s key exports extended their decline for the 12th straight month in September, but by a smaller percentage than in August.

Non-oil domestic exports (Nodx) fell by 13.2 per cent in September from the same month a year ago, following a revised 22.5 per cent contraction in August, data from trade agency Enterprise Singapore showed on Tuesday.

The decline was slightly better than expected.

Economists polled by Reuters had expected a drop of 14.7 per cent, while economists in a Bloomberg poll were looking at a 15 per cent decline.

On a month-on-month basis, September’s exports were also up by 11.1 per cent from the previous month, reversing the 6.6 per cent fall in August.

In September, the fall in Nodx was due mainly to non-electronics shipments.

Non-electronics Nodx declined by 13.6 per cent year on year, a better performance than the 22.9 per cent contraction in August.

Non-monetary gold, pharmaceuticals and food preparations contributed the most to the decline.

Pharmaceutical exports fell 31.2 per cent in September to $995.1 million, following a 37.7 per cent fall in August.

ANZ head of Asia research Khoon Goh said the decline in pharma exports, which account for 12 per cent of Singapore’s total shipments, should be temporary.

He added that the recent rise in global oil prices will be reflected in petrochemical exports in the next few months. In September, petrochemical shipments, which account for around 8 per cent of total Nodx, fell 14.8 per cent from the same month a year ago to $1.07 billion.

Meanwhile, electronics shipments fell by 11.6 per cent year on year in September, also a better performance than the 21.1 per cent contraction in the previous month.

Integrated circuits, personal computers and parts of PCs contributed the most to the fall.

DBS Bank economist Chua Han Teng said this is the smallest contraction since late 2022, with signs of recovery.

“We expect Singapore’s electronics exports to benefit from the modest turnaround in global semiconductor sales, and medium-term optimism on artificial intelligence-related chips,” he said.

Shipments to Singapore’s top 10 markets mostly fell, led by Taiwan, Indonesia and Thailand.

Exports to China, Hong Kong and the United States were the only bright spots in September.

The US and China are the two biggest markets for Singapore’s shipments. Both accounted for 33.5 per cent of total exports in the first nine months of 2023.

ANZ’s Mr Goh said there appeared to be some encouraging trend improvements in Singapore’s exports to China and the US in recent months, while growth for the rest of the Asian region remained in double-digit contraction.

He foresees a “big catch-up” in shipments over the coming months, with a “good chance” that exports will have a positive growth rate by the year end.

Mr Chua said Nodx was down 18.8 per cent for the third quarter from the same period a year ago. It was the weakest quarterly performance since the first quarter of 2009, when Nodx fell 25.7 per cent year on year.

DBS Bank expects Nodx to recover gradually towards the end of the year and into early 2024.

New export orders within Singapore’s manufacturing purchasing managers’ index had improved for the fourth straight month in September, returning to the 50-point mark that separates expansion and contraction in activity.

The Government’s forecast is that Nodx will contract by 9 per cent to 10 per cent in 2023.

OCBC Bank chief economist Selena Ling is less sanguine about export prospects, and said the full-year Nodx is likely to contract 11 per cent year on year even if there are gradual improvements for the rest of 2023.

She pointed to the latest Israel-Hamas conflict, which has fuelled concerns of spillover to the rest of the Middle East region and the energy market.

She added that this will push up oil prices, which could “complicate the disinflation trajectory” and make it harder for “central banks to remain on pause mode or pivot to easing down the road”.

Ms Ling also noted that there are headwinds from the US’ moves to tighten restrictions on exports of artificial intelligence chips and chipmaking equipment to China.

“It remains prudent to see what happens from here, and whether the Nodx green shoots will sustain into the new year,” she said.