SINGAPORE – Singapore’s non-oil domestic exports (NODX) declined 20.6 percent year-on-year in December 2022, led by drops in both electronics and non-electronic products.
On a month-on-month seasonally adjusted basis, NODX declined 3.3 percent in December, following November’s 9.2 percent drop.
This brought full-year NODX growth in 2022 to 3.5 percent, which OCBC economist Selena Ling said was the slowest annual growth since 2019. The same exports grew 12.5 percent in 2021 and 4.4 percent in 2020.
Non-domestic oil exports declined as a whole to Singapore’s top 10 markets in December, with exports to China falling 31.8 percent, and to Indonesia by 35.4 percent. Exports to Japan, however, increased 6.8 percent and to South Korea by 14.3 percent.
“The Covid situation in China, particularly the caution amid the re-opening announcement in early December, likely weighed on economic activities, which is reflected in the dampened NODX of specialized machinery, pharmaceuticals and primary chemicals to China,” Ling said.
She added NODX in the first quarter of 2023 are expected to be grim, with up to a 17 percent contraction year-on-year given fears of a global recession.
“Until the global central banks including the US Federal Reserve clearly pivot to a rate pause and the prevailing recession worries abate, global demand conditions are likely to continue to be weighed down in 1Q23,” said Ling.
Singapore’s economy grew faster that official forecasts in 2022 but slower activity in the fourth quarter points to significant risks ahead for the city-state in the new year as global demand weakens and inflationary pressures weigh.
Singapore’s economy grew 3.8 percent in 2022, preliminary data from the Ministry of Trade and Industry showed, beating government forecast for growth of 3.5 percent and down from 7.6 percent in 2021.
Gross domestic product (GDP) expanded 2.2 percent in October-December on a year-on-year basis, the government data showed, almost half the 4.2 percent growth seen in the third quarter. Eight economists polled by Reuters had expected growth of 2.1 percent.
“It is concerning that there is a slight quarter-on-quarter fall in services … this showed the impact of the global slowdown on external oriented services sectors, and that further growth from current levels will be harder to achieve in 2023,” said MUFG analyst Jeff Ng.
GDP grew 0.2 percent on a quarter-on-quarter seasonally adjusted basis in October-December.
Singapore Prime Minister Lee Hsien Loong said in his New Year that the international outlook remains troubled, which will affect the city-state’s economy. The government expects growth of between 0.5 percent to 2.5 percent this year.
Singapore has seen some signs of price pressures easing in recent months but inflation still remained elevated at about 5 percent.
Meanwhile, the country’s sales tax has been raised to 8 percent from 7 percent since Jan. 1 this year as the government needs more revenue to fund increasing healthcare expenditure of its aging population. The sales tax will be further raised to 9 percent from 2024.
Singapore’s government has pledged to give almost 3 million Singaporeans at least S$700 in cash payouts over five years as part of an S$8 billion “assurance package” to help them cope with rising prices.
Capital Economics said the economy is likely to struggle, which means the Monetary Authority of Singapore is unlikely to tighten monetary policy in 2023. The central bank tightened its foreign exchange-based monetary policy four times last year to fight rampant inflationary pressures.
“Looking ahead, we think growth is likely to weaken further. Exports are likely to fall further if, as we expect, the global economy enters a recession in 2023,” Capital Economics said.
“Elevated interest rates, declining household savings and high inflation are likely to drag on domestic demand.” — Reuters
