Singapore Exports Surge Most in Five Years, Beating Forecasts

(Bloomberg) -- Singapore’s non-oil domestic exports increased at the fastest pace in five years in February, adding to signs of a recovery in the trade-dependent economy.

Key Points

• Non-oil domestic exports rose 21.5 percent in February from a year ago, International Enterprise Singapore said in a report; the median estimate of 18 economists surveyed by Bloomberg was a 12.5 percent increase

• Electronics exports increased 17.2 percent in the period, also beating forecasts, after a 6.1 percent gain in January

• Non-oil exports rose 1.4 percent, compared with a median forecast for a 0.1 percent contraction

Big Picture

The surge in exports adds to signs of recovery after a 2.8 percent contraction in shipments in 2016. A pickup in demand from China and better prospects for developed economies are boosting the outlook for the industry. Economists have revised higher their projections for exports and economic growth this year, forecasting 2.3 percent expansion.

The domestic economy is still under pressure though, with weak jobs growth and wage pressures restrained, the central bank said on March 8. The Monetary Authority of Singapore, which uses the currency rather than interest rates as its main policy tool, will probably keep its stance unchanged at its next meeting in April after easing last year.

Economists’ Takeaways

• “Looking ahead, the balance of forces is positive for Singapore’s exports on account of the following: ongoing global trade recovery with a recovery in global capex mitigating any fading impulse from the latest smartphone cycle; and a meaningful sustained pick-up in U.S. economic activity, buoyed by a reflationary fiscal policy under a Trump administration,’’ Weiwen Ng, an economist at Australia & New Zealand Banking Group Ltd. in Singapore, said in a note. “However, underlying risks of protectionism -- if they materialize -- could derail this constructive outlook for trade-dependent Singapore.’’

• “Coupled with the strong exports print, improvements in Singapore’s economic fundamentals, led by the improving manufacturing sector -- seen in both industrial production and manufacturing PMI prints -- should continue to buoy growth and market sentiment,” Oversea-Chinese Banking Corp. said in a note.

Other Details

• Pharmaceuticals exports fell 4.4 percent from a year ago

• Petrochemicals surged 45.3 percent

• The biggest export gains on an annual basis were to the following markets: 65.1 percent increase in shipments to China, 54 percent to Taiwan, 32.3 percent to South Korea

To contact the reporter on this story: David Roman in Singapore at droman16@bloomberg.net.

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Chris Bourke

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