Singapore trade recovery to continue after May NODX growth

SINGAPORE (ICIS)–Singapore’s external-facing industries including petrochemicals are expected to benefit from the continued recovery in global demand and higher oil prices after posting strong growth last month.

The country’s exports of petrochemicals rose by 55.7% year on year to Singapore dollar (S$) 1.41bn in May, supporting the overall growth in non-oil domestic exports (NODX), data from Enterprise Singapore showed.

“Given the strengthening exports to Singapore’s key trading partners, this also suggests that trade demand in the region as a whole has continued to stay buoyant, a remarkable feat despite the rise in COVID-19 infections in several economies,” said Singapore’s UOB Global Markets & Research.

“Moreover, higher oil prices from a year ago will also likely lift overall export value for the year ahead,” it said.

Petrochemical shipments to China rose by 27.3% year on year in May while those to Malaysia more than doubled.

The growth in petrochemical exports in May marked the sixth straight month of strong double-digit expansions.

The country’s NODX rose by 8.8% year on year to S$15bn in May, accelerating from the 6.0% growth in April this year.

Non-electronic NODX, which includes petrochemicals and pharmaceuticals, rose by 8.1% in May, up from the 4.7% expansion in April.

Pharmaceutical exports continued to drop, contracting by 18.1% year on year albeit moderating from the decline of 40.9% in April.

Overall non-electronic NODX to seven out of Singapore’s top 10 trade partners rose in May, with shipments to China surging by 42.8%.

Singapore’s NODX growth is expected to remain robust, in line with the synchronised pick-up in global growth, a sustained tech upcycle and global vaccine manufacturing benefitting pharmaceutical exports, according to Japan’s Nomura Global Markets Research.

“We think the sequential pickup in pharmaceutical exports – which tend to be highly volatile – in May was encouraging and will likely improve further out,” it said.

Enterprise Singapore earlier in May said that the country’s NODX are expected to grow by 1% to 3% year on year in 2021, up from a previous projection of zero to 2% expansion.

The improved projection considers “favourable sector-specific output and export trends” in January to March, especially for electronics, specialised machinery and petrochemicals, Enterprise Singapore said.

“Higher expected 2021 oil prices may support oil trade and in turn total trade,” it said.

Focus article and interactive by Nurluqman Suratman