In a surprising move, the Singaporean government has revised its forecast for non-oil domestic exports (NODX) growth for 2024 significantly downwards. On November 22, Enterprise Singapore announced that NODX is now expected to grow by only 1 percent year-on-year, a stark reduction from the previous August forecast of 4 to 5 percent expansion. This change is a clear reflection of a weaker-than-expected economic recovery.

The entity cited that, despite a generally supportive external environment for growth, there are considerable uncertainties within the global economy. These include a more challenging and competitive trade environment which could dampen global trade and growth prospects.

A Closer Look at the Economic Landscape

In its recent update, Enterprise Singapore emphasized the downside risks, particularly the potential for a slower recovery in the latter half of 2024, which could result in NODX growth falling below the forecast range. Such a scenario seems to be unfolding, as recent data indicates a poorer-than-anticipated performance, largely driven by volatility within the pharmaceuticals and maritime sectors.

Notably, the outlook for the pharmaceuticals sector paints a concerning picture; a net weighted balance of only 8 percent of firms forecast new export orders for Q4, a dramatic drop from 56 percent in the previous quarter. Meanwhile, the electronics sector has also faced its challenges, recording a slight decrease in NODX performance with -0.7 percent growth year-on-year in September and a modest 2.6 percent in October, following impressive double-digit growth of 16.7 percent and 35.1 percent in July and August, respectively.

Global Economic Outlook

Looking beyond its borders, the International Monetary Fund predicts a 3.2 percent growth in global economic activity by 2025. Key Singaporean trade partners, including China, the United States, the European Union, and ASEAN member states, are also expected to show growth. On the trade front, the World Trade Organization anticipates a 3 percent growth in global merchandise trade in 2025—an improvement from the projected 2.7 percent growth in 2024. Nevertheless, global tensions and economic policy uncertainties could impose risks on these forecasts.

Q3 Performance Insights

In terms of recent performance, NODX experienced a rebound in the third quarter of 2023, showing a 9.2 percent year-on-year increase, which follows a decline of 6.5 percent in the second quarter. Growth in electronic exports was particularly noteworthy, marking the second consecutive quarter of growth, bolstered by a remarkable year-on-year rise of 17 percent in electronic products. Key drivers of this growth included integrated circuits, disk media products, and personal computers, which saw staggering increases of 23.7 percent, 117 percent, and 52.1 percent, respectively.

Non-electronic products also demonstrated a resurgence, with a 7 percent year-on-year increase after experiencing a 9.2 percent decline in the preceding quarter. Special machinery, non-monetary gold, and food preparations emerged as the leading contributors to non-electronic NODX growth, showcasing rises of 18.8 percent, 43.9 percent, and 20.6 percent, respectively.

Furthermore, NODX to major markets rose in the third quarter, with Malaysia (30.7 percent), China (12.7 percent), and the United States (6 percent) standing out as the principal contributors to this growth.

On a seasonally adjusted quarter-on-quarter basis, NODX grew by an impressive 7.9 percent in Q3, recovering from a 1.3 percent decline in Q2, suggesting that while current challenges loom large, there is still potential for strategic improvements in Singapore's export landscape.

As the global economic situation continues to evolve, all eyes will be on how Singapore navigates these turbulent waters and what measures will be implemented to bolster its trade position moving forward.