Singapore non-oil exports grow for third consecutive month, Q4 GDP revised up
SINGAPORE (NewsRise) -- Singapore's key exports rose for the third straight month in January, underlining the resurgence in regional manufacturing, although detailed fourth-quarter economic data showed some sectors of the city-state's economy remained in the doldrums.
Economists say the growth momentum could hold for at least the first half of this year, given signs of global recovery and especially the stabilization in China. However, uncertainty about the policies of U.S. President Donald Trump remains a risk.
Trade agency International Enterprise Singapore said on Friday that non-oil domestic exports, or NODX, grew 8.6% in January from a year ago, following a 9.1% expansion in December. The value of goods sent to China increased 36.9% while shipments to Taiwan climbed 75.3% and those to South Korea soared 51.5%.
Looking ahead, IE Singapore expects NODX for the year to register flat to 2% growth, turning around from a 2.8% contraction in 2016.
Singapore tracks NODX data as they provide a better gauge of economic activity in the city-state - total exports include the billions of dollars of goods produced elsewhere that are shipped through Singapore, which is home to the world's second-largest container port. Exports from Singapore's refineries are also excluded as oil prices tend to be volatile.
Other data released Friday also showed an improving economy.
The Ministry of Trade and Industry raised its estimate for fourth-quarter gross domestic product growth to 2.9% year-on-year, up from an earlier estimate of 1.8%. Manufacturing was the star performer, growing 11.5% year-on-year during the last three months of 2016 after expanding by just 1.8% in the preceding period.
The upward revision in fourth-quarter GDP means Singapore's full-year growth for 2016 is now 2.0%, faster than the 1.9% recorded in 2015.
"Singapore is seeing a strong cyclical uplift from a synchronized global recovery. Manufacturing and trade-related services will continue to lead this recovery, but we expect growth to broaden out to other services, including financial and business services," Maybank Kim Eng economist Chua Hak Bin said in a note to clients.
Selena Ling, Oversea-Chinese Banking Corp.'s head of treasury research and strategy, agreed there was room for optimism, based on the recent global and regional manufacturing Purchasing Managers' Indexes, which gauge factory activity.
However, she warned that the manufacturing momentum could falter should the Trump administration harden its trade policy stance, especially towards China, Japan and other key trading partners.
MTI said "the improved momentum seen in the manufacturing sector towards the end of 2016 is expected to be sustained into 2017, supported by a continued recovery in the global demand for semiconductors and semiconductor equipment."
Singapore's economy has slowed in recent years, hurt by a slowdown in key sectors such a financial services and offshore and marine engineering. Home-grown Keppel Corp., the world's biggest maker of oil rigs, has already laid off tens of thousands of workers and announced plans to close some of its yards in Singapore.
DBS Group Holdings and OCBC, the city-state's two largest banks, earlier this week reported lower earnings for the three months to December as provisions for bad debt soared.
According to MTI, Singapore's finance and insurance sector grew 0.6% in the fourth quarter from a year ago, faster than the 0.1% it managed during the preceding quarter. The improved performance was largely due to the robust growth in the forex trading and security dealing activities segments, the ministry said.
Construction, however, shrank 2.8%, after contracting 2.2% in the previous three-month period.
The accommodation and food services sector shrank 0.2% year-on-year, weighed down by the food services segment, which contracted on the back of weak sales in restaurants.
MTI noted that the outlook for construction has weakened due to the drop in contracts awarded in the last two years. Other sectors such as offshore and marine, retail and food services are also likely to continue to face headwinds, it said.
However, Singapore's transportation and storage sector is likely to benefit from the projected improvement in global trade flows, while sectors such as information and communications, education, and health and social services are expected to remain resilient, the ministry said.
Maybank's Chua said the ministry has become a lot more positive about the outlook compared to three months ago when it predicted that externally-oriented service sectors would remain sluggish.