Singapore downgrades trade forecasts with 'worse-than-expected' first quarter

SINGAPORE: Singapore downgraded its 2023 trade forecasts on Thursday (May 25) due to "worse-than-expected" performance in the first quarter of the year.

Besides the first quarter showing, the forecast was also weighed down by the manufacturing downcycle and lower expected oil prices, said Enterprise Singapore (ESG) in its review.

Non-oil domestic exports (NODX) for the year have been downgraded to -10.0 per cent to -8.0 per cent, and the total merchandise trade forecast has also been adjusted to -8.0 per cent to -6.0 per cent.

On a year-on-year basis, NODX contracted by 16.2 per cent in the first quarter of 2023, extending the 14.0 per cent decline in the previous quarter, ESG data showed. The decline was contributed by both electronic and non-electronic exports.

Electronic NODX contracted by 25.2 per cent, following the 15.9 per cent decrease in the previous quarter, ESG said. Integrated circuits, disk media products and parts of personal computers contributed the most to the decline, falling by 31.4 per cent, 41.1 per cent and 33.4 per cent respectively.  

Non-electronic NODX meanwhile fell by 13.6 per cent following the 13.4 per cent decrease in the previous quarter.

The biggest declines were in non-monetary gold,  petrochemicals and structures of ships & boats, which fell by 34.8 per cent, 24.6 per cent and 52.4 per cent respectively.

NODX to the top markets, except Japan, declined in the first quarter of the year. The biggest contributors to the NODX decline were China, Hong Kong and Taiwan.

Singapore's economy grew 0.4 per cent year-on-year in the first quarter of 2023, higher than the advance estimates of 0.1 per cent, but still marks a sharp slowdown from the 2.1 per cent growth in the previous quarter.

In its review, ESG also said that total merchandise trade decreased by 7.8 per cent in the first quarter of 2023, extending the 1.0 per cent decrease in the preceding quarter.

Non-oil trade declined by 9.5 per cent, extending the previous quarter's 4.2 per cent decrease, while oil trade saw a flat performance, after the 14.1 per cent growth in the fourth quarter of 2022.

On a quarter-on-quarter seasonally adjusted basis, total merchandise trade decreased by 4.5 per cent in the first quarter of 2023, after declining 11.3 per cent in the previous quarter. Oil and non-oil trade declined by 10.2 per cent and 3.0 per cent respectively.

In terms of global outlook, the external demand conditions had weakened for global manufacturing and goods exports, in contrast to the uptick in services activity, said ESG.

Manufacturing output slowed in 1Q 2023 particularly amongst Asian economies more exposed to the global electronics downcycle, it said, adding that "further weakness is expected as new orders stayed in the contractionary region for key exports such as electronics and chemicals".

"Meanwhile, lower expected oil prices in 2023 could weigh on our oil trade in nominal terms, and in turn total trade," it added.

"The sharp downturn in the global electronics sector is expected to weigh on electronics trade and exports performance, while the outlook for petrochemicals sector remains sluggish due to excess global supply and planned plant maintenance shutdown."

The Ministry of Trade and Industry (MTI) on Thursday maintained the country’s GDP growth forecast for the year at 0.5 per cent to 2.5 per cent, with growth likely to “come in at around the mid-point” of this range.