Singaporean NODX grows above expectations in April

Singapore’s NODX surprised on the upside in the month of April. On a year-on-year basis, NODX rose 9.7 percent, in spite of the Circuit Breaker and was mainly driven by non-electronics led by pharmaceuticals because of a low base one year ago. This was a slowdown from the 17.6 percent year-on-year growth in March, but came above consensus expectations of a fall of 5 percent year-on-year. The upside surprise in NODX in April marks the third straight month of growth after 11 month contraction streak till January 2020.

Non-electronics exports slowed down from 20.5 percent in March to 12.8 percent in April. Pharmaceuticals, which are usually volatile, was the star performer because of a low base in April 2019. Other contributors were food preparations and non-monetary gold. Pharmaceuticals exports are lifted by the Covid-19 pandemic, with medical supplies being in high demand globally. Non-monetary gold exports are possibly helped by bouts of risk aversion arising from Covid-19, US-China bilateral tensions and central bankers’ caution over the economic outlook, noted Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.

Electronics exports dropped 0.6 percent in April, reversing the 5.8 percent growth in March. Markedly, PCs, diodes & transistors and disk drives disk drives exports were the key drags. Global electronics demand might still face choppy conditions ahead with the U.S.-China tensions at risk of re-escalation.

NODX growth is seeing a second wind from COVID-induced demand for pharmaceuticals, non-monetary gold and food preparations in the midst the disruptions to the global supply chain and medical shortages and bouts of risk aversion.

“The low NODX base for most of 2019, especially the double-digit NODX contractions in 2Q19, which could be attributed to the US-China trade war, also helped. Combined, they could help limit the NODX fallout from the domestic Circuit Breaker period, but the global re-opening of economies post-lockdown and the risk of subsequent infection waves will determine the NODX momentum going into the second half of 2020”, added Selena Ling.