SINGAPORE’S non-oil domestic exports (NODX) shrank 1.5 per cent year on year (yoy) in December, following a continued decline in electronics exports, data from Enterprise Singapore (EnterpriseSG) showed on Wednesday (Jan 17).

The December figure was a reversal of the previous month’s 1 per cent rise, and in contrast with the 3 per cent growth that private-sector economists polled by Bloomberg were expecting.

The contraction was unexpected, said private-sector economists, who had generally been expecting NODX to post positive growth for December due to the low year-ago base.

“This disappointment suggests that the trade recovery trajectory remains somewhat bumpy in the near-term,” said OCBC chief economist Selena Ling.

DBS economist Chua Han Teng noted that the full-year NODX performance, which declined 13.1 per cent yoy, made 2023 the worst-performing year since 2001.

Electronics exports continued to decline on a yoy basis, while non-electronics grew for the second month, though at a moderated pace.

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On a month-on-month seasonally adjusted basis, NODX shrank 2.8 per cent in December, reversing from the previous month’s 0.3 per cent growth, as electronics exports grew and non-electronics exports declined.

On a seasonally adjusted basis, NODX value reached S$14.6 billion in December, down from S$15 billion in November.

Electronics exports declined for the 17th consecutive month, down 11.7 per cent yoy. However, this was an improvement on November’s 12.8 per cent decline.

A recovery in the Republic’s electronics exports could materialise in the near term, economists said.

“We are already seeing clear evidence of a bottoming of global semiconductor demand, with growth underpinned by a continued recovery in China and Asean,” said RHB acting group chief economist Barnabas Gan.

UOB economists Alvin Liew and Jester Koh also pointed to December’s purchasing managers’ index data, which saw Singapore’s electronics sector turn expansionary for the second straight month.

Personal computers (minus 34.3 per cent), integrated circuits (minus 7.9 per cent) and parts of personal computers (minus 25.7 per cent) contributed most to the decline in December’s electronics exports.

Despite the decline, exports of integrated circuits – which accounted for close to half of electronics NODX in 2023 – are improving, said DBS’ Chua. “This is likely in tandem with the recovery in global semiconductor sales.”

Non-electronics shipments posted a 1.4 per cent growth in December, extending from the previous month’s 5.2 per cent increase.

Pharmaceuticals (56.9 per cent), non-monetary gold (55.5 per cent) and miscellaneous manufactured articles (69.1 per cent) contributed most to the growth in non-electronics NODX, EnterpriseSG said.

Key exports to six of Singapore’s top 10 markets fell in December, led by a decline in exports to Taiwan, South Korea and Japan. But exports rose to the United States, the European Union, Hong Kong and China.

For the full year, the US overtook China as Singapore’s top NODX destination in 2023, even as the share of key exports to China grew, noted UOB’s Liew and Koh.

Total trade fell 6.8 per cent yoy, reversing from the 0.1 per cent growth in November. Total exports shrank 4.6 per cent, reversing from the previous month’s 2.6 per cent rise. Total imports fell 9.3 per cent, deepening from the previous month’s 2.5 per cent contraction.

On a seasonally adjusted monthly basis, total trade was down 4.9 per cent in December, following November’s 4 per cent decrease.

The level of total trade reached S$99.3 billion in December on a seasonally adjusted basis, lower than the previous month’s S$104.4 billion.

“Looking ahead, the near-term NODX outlook still looks slightly challenging from the global supply chain angle,” said OCBC’s Ling, who is projecting a yoy NODX growth of 4 to 6 per cent in 2024.

EnterpriseSG expects NODX to grow by 2 to 4 per cent yoy in 2024.

The ongoing tensions in the Red Sea could have an impact on shipping costs and cause some supply chain diversions in the near term, she added.

Liew and Koh, who have pencilled in an expansion of 6 per cent in 2024, expect recovery in NODX “to be largely driven by base effects”, particularly from the double-digit declines in electronics NODX that were seen from November 2022 to September 2023.

RHB’s Gan noted that sequential growth in the fourth quarter of 2023 had been positive, marking a reversal from the contractionary pace from June to September last year. For 2024, he has forecasted a yoy NODX growth of 3 per cent.

“The improvement in momentum, especially towards end-2023, underpins a recovery export pattern for Singapore in 2024,” he said.