Singapore: April Non-oil Domestic Exports herald a weak start to the economy in 2Q21

Just released, Singapore’s non-oil domestic exports (NODX) for April missed expectations with a 6% year-on-year rise as against the consensus of steady double-digit growth close to March’s 11.9% rate (revised down from 12.1% initial estimate). Unlike exports from other Asian countries, the base effect for Singapore NODX was slightly less favourable in April.

However, it wasn’t just the unfavourable year-ago base. An 8.8% month-on-month (seasonally adjusted) fall was the first negative reading in six months underscoring the current weakness.

The latest NODX slowdown squares with still weak external demand in Singapore's main export markets as reflected in large year-on-year declines in exports to the US, Europe and Japan (-42% YoY, -30%, and -33% respectively). Exports to China bucked this trend with a 55% YoY bounce.

By product type, electronics remained the key driver, though with a sharp slowdown in growth (10.9% YoY vs. 24.4% in March). Pharmaceutical weakness returned with a 41% YoY plunge more than reversing a one-off 25% rise in March. Petrochemicals picked up some of this slack with another strong month (63% YoY following 51% in March).

April data signals a weak start to the economy in 2Q21. The export slowdown may be transitory and low base effects will still help a strong bounce in GDP of double-digits in the current quarter. However, the recent tightening of Covid-19 restrictions effective yesterday (16 May) for a month (read more here) will also weigh on domestic spending.

We will look to scale back our 14.2% YoY 2Q GDP forecast on more signs of economic weakness in forthcoming activity data. We believe fiscal policy will remain in the forefront to soften the Covid-19 impact on the economy, while the Monetary Authority of Singapore will hold on to its neutral policy stance ahead.