Exports show signs of recovery

December's non-oil domestic exports up 26.1 per cent

By Robin Chan

SINGAPORE'S exporters are shaking off the last effects of the recession and are firmly in the ascendant again.

Data released yesterday by International Enterprise Singapore shows that non-oil domestic exports (Nodx) jumped 26.1 per cent last month from a year ago, following an 8.7 per cent increase in November.

Last month's bumper trade figures improve Singapore's full-year export balance sheet and mean total Nodx shrank by 10.6 per cent last year, which is in line with the Government's forecast of a 10 per cent to 11 per cent decline.

Exports account for two-thirds of gross domestic product (GDP) and the Republic is dependent on a revival in shipments overseas to fuel recovery.

The Government had predicted up to a 13 per cent shrinkage and some private sector economists had pencilled in a 17.5 per cent export slump.

During the depths of the recession last January, exports plunged 34.7 per cent.

'We've seen a very nice bounce from the troughs,' said OCBC Bank economist Selena Ling.

Despite the December data signalling a continuing export turnaround, economists point out that the full-year decline is still the worst in eight years.

The last time trade fell away so swiftly was during the tech bubble in 2001, when it slumped by 14.5 per cent.

Standard Chartered economist Alvin Liew noted that the slide this time has been more protracted, with exports declining for two straight years - 7.9 per cent in 2008 and 10.6 per cent last year.

'This has been a very long period of decline in terms of trade activity, having straddled two years,' he said.

December exports grew 1.7 per cent from November, the fifth month-on- month rise in six months, following November's 20 per cent increase.

HSBC economist Robert Prior-Wandesforde noted that, since January last year, exports have risen 30 per cent and are just 8 per cent below their level in January 2008.

'While base effects are obviously important, exports are seeing a genuine improvement as a result of stronger regional and global domestic demand,' he said.

The best news came from the embattled electronics sector, which saw shipments end a 34-month slump by rising 25 per cent in December over the same month a year ago.

'It is clear that the sector has been on an improving trend for a few months now but this is a blowout number, which strongly supports the notion that the global electronics cycle has turned,' said Mr Prior-Wandesforde.

Exports of drugs rose 75.7 per cent in December from a year ago.

The good export news was evident across all of Singapore's top 10 export markets, with the exception of Japan.

The largest contributors to the trade surge were Hong Kong and Taiwan, which were up 79 per cent and 127 per cent, respectively, year-on-year.

Trade to Europe rose 27 per cent, while exports to the United States managed a 5.9 per cent rise in December year-on-year.

Citigroup economist Kit Wei Zheng noted that the impressive export numbers could herald better fourth-quarter GDP growth, which is officially tipped to rise 3.5 per cent from the previous year.

And Mr Prior-Wandesforde was upbeat about the outlook for the first quarter of this year.

'Although it is extremely early days, it is beginning to look likely that first-quarter GDP will bounce and bounce strongly after the pharmaceuticals-related decline (in the fourth quarter last year),' he said.

Mr Prior-Wandesforde estimates Nodx will rise 15 per cent to 20 per cent on average this year and GDP growth will hit 6.5 per cent.

Mr Kit said that with recently opened biologics and petrochemical plants ramping up production this quarter, year-on-year GDP growth could touch almost 10 per cent in the first quarter and then moderate.