SINGAPORE: Singapore's non-oil domestic exports (NODX) in May expanded by 3.7 percent compared to a year ago, largely in line with expectations.

Domestic exports of electronic goods declined 16 percent in May on year – the fourth straight month of contraction.

But this weakness was partly offset by a 76 percent jump in pharmaceuticals and a strong growth in the transport engineering sector.

Alvin Liew, Economist, UOB Group, said: "We still see that the electronics contraction is not yet done. But then the support is still coming from non-electronics segment, in particular, the rather volatile pharmaceutical exports.

"Last year, pharmaceuticals grew by nearly 24 percent year-on-year. And this year, in these five months, it is already near to a 24 percent year-on-year growth. We expect pharmaceuticals to come in at least 15 percent year-on-year. Transport engineering is still very strong."

UOB expects the electronics sector to bottom out in June, with a moderate recovery kicking in only after that.

But some analysts are even more bearish.

The tech sector is expected to remain weak as long as investments into production equipment stay flat.

Irvin Seah, Economist, DBS Group Research, said: "What this implies is that semiconductor manufacturers are not ramping up their production capacity in the immediate term. So if you consider the lead time of all these indicators, you'll likely see the weakness in demand for electronics to filter into the third quarter, before you start to see a moderate recovery in the fourth quarter."

Going forward, analysts said exports in the pharmaceutical and transport engineering sectors would help to sustain the growth in Singapore's non-oil domestic exports.

However, the speed at which the electronics sector picks up will decide whether or not the year will end off better-than-expected.

DBS, anticipating a slower recovery in electronics, is downgrading its export growth forecast by 1 percentage point to 8 percent.

Mr Seah said: "We expected NODX to register 9 percent. But because of the weaker-than-expected performance from electronics, we have downgraded it a little bit to 8 percent for the full year, which is more or less in line with the government forecast as well."

UOB is keeping to its more conservative estimate of a 6.3 percent exports growth for the full year.


- CNA/so