Singapore has revised its 2023 forecasts for non-oil domestic exports (NODX) and total merchandise trade downward, primarily due to weaker-than-anticipated performance in the first three quarters of the year, particularly in oil and electronics trade, as reported by Enterprise Singapore (EnterpriseSG) on November 22, 2023.

NODX is now projected to decrease by 12% to 12.5% year-on-year (yoy), a steeper decline than the earlier forecast of 9% to 10%. Similarly, total merchandise trade is expected to shrink by around 10% yoy, adjusted from the previous projection of 9% to 10%. These adjustments follow earlier downgrades made in May and August.

In the first three quarters of 2023, oil and electronics trade contributed significantly to the decline, accounting for 29% and 60% of the total merchandise trade drop, respectively. The third quarter continued this trend, with lower oil prices and weakened electronics demand due to high inventory levels impacting overall trade performance.

Despite this downturn, EnterpriseSG anticipates a modest recovery in trade for 2024, with NODX projected to grow by 2% to 4% and total merchandise trade expected to expand by 4% to 6%. The expected increase in oil prices is anticipated to provide support for oil trade in nominal terms, while global electronics demand is expected to recover gradually as inventory levels normalize.

Private-sector economists predict a return to positive yoy NODX growth in the fourth quarter. Some economists have noted a gradual improvement in semiconductor sales and optimism surrounding AI-related chips, indicating a potential rebound in exports.

In the third quarter of 2023, NODX fell by 18.8% yoy, marking the weakest quarterly performance since early 2009. Both electronic and non-electronic NODX experienced declines, with electronic exports down 20% and non-electronic exports down 18.5%.

As for total merchandise trade, it dropped 16.4% yoy in Q3, with oil trade declining by 25.1%. While seasonally adjusted total merchandise trade saw a quarterly increase of 3.2%, the overall outlook for 2024 appears more positive, with expectations of growth in Singapore’s externally facing sectors driven by recovering global demand.

EnterpriseSG cited that the International Monetary Fund (IMF) projects global economic growth of 3% in 2023, with a slight slowdown to 2.9% in 2024. The World Trade Organization (WTO) also forecasts a 0.8% growth in global merchandise trade for 2023, rebounding to 3.3% in 2024.