Singapore’s export performance took a notable hit in June, with non-oil domestic exports (NODX) decreasing by 8.7% year-on-year, a deeper decline than analysts had anticipated. This contraction follows a revised drop of 0.7% in May. The decrease was attributed to fluctuations in shipments, particularly in non-monetary gold and electronic goods, as reported by Enterprise Singapore on July 17, 2024.

Economists had forecasted a milder decline of just 1.3%, making the actual results a surprising development. On a seasonally adjusted monthly basis, NODX slightly dipped by 0.4% in June, totaling S$13.8 billion, after a 0.7% decline in the previous month. Despite these setbacks, overall trade saw a year-on-year rise of 1.2% in June, building on the previous month’s significant 13.9% growth.

DBS economist Chua Han Teng described June’s NODX figures as a “temporary setback” and maintained an optimistic outlook for a gradual recovery in exports. He noted that base effects could be more favorable in the third quarter, with signs of improved external demand reflected in new export orders.

Electronic exports plummeted by 9.5% year-on-year in June, reversing the previous month’s substantial 19.6% growth. The decline in electronics was driven mainly by drops in telecommunications equipment, disk media products, and integrated circuits.

Despite the downturn, some analysts expressed cautious optimism about the electronics sector’s potential for recovery. UOB’s associate economist Jester Koh remarked that while the recovery might be delayed, it was not entirely derailed. He highlighted that the trend of electronics exports was gradually improving from its weakest point last year.

Sheana Yue from Oxford Economics indicated that demand for electronics was increasing as the global electronics cycle reaches its low point. She noted a trend of businesses investing in chip production to capitalize on the artificial intelligence wave, suggesting that Singapore’s electronics trade remains resilient despite apparent volatility.

However, challenges persist. Non-electronic exports also saw a significant decline, dropping by 8.5% year-on-year, largely due to a staggering 51.1% decrease in non-monetary gold exports, amounting to about S$600 million.

Overall, NODX to Singapore’s top markets fell in June, with notable exceptions being Thailand, Malaysia, Indonesia, and the eurozone. Exports to Hong Kong plummeted by 41.9%, a stark contrast to the previous month’s increase. Exports to China also fell by 11.2%, exacerbated by a near-halving of non-monetary exports.

OCBC chief economist Selena Ling warned of potential downside risks to the full-year NODX outlook of 4% to 6%, given the current negative trend in the first half of the year. UOB’s Koh adjusted his NODX forecast down to 2.5%, indicating that a more significant recovery may only occur in the fourth quarter.

Analysts also cited geopolitical uncertainties and ongoing economic policy decisions, particularly in the US, as factors that could further influence Singapore’s export landscape moving forward.