Singaporean NODX came in worse than expectations in January. On a year-on-year basis, NODX contracted 10.1 percent, the worst performance since October 2016. This was partially because of the high base last year. However, the magnitude of the fall strengthens the fact that 2019 is beginning on a weak footing for trade. Sequentially, NODX dropped 5.7 percent, the worst since June 2018 and lower than the revised 4 percent fall seen in December.
Markedly, electronics and non-electronics exports fell 15.9 percent year-on-year and 7.9 percent, respectively. Moreover, NODX to all top NODX markets recorded a year-on-year contraction in the month, led by China, South Korea and Hong Kong. North Asian markets were likely most affected by the U.S.-China trade tensions, but other regional NODX markets were also weak in January.
IE Singapore has projected NODX growth of 0 percent to 2 percent this year, which will be a deceleration from the 4.2 percent growth seen in 2018 and 8.8 percent in 2017.
“Our 2019 NODX forecast is -0.2 percent yoy, which is slightly lower than the official forecast. We’ll have to see the February performance for a better picture of the 1Q19 NODX performance, given that January-February is typically volatile due to the timing of the Chinese New Year festive season too”, said Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.
Pending the outcome of the U.S.-China trade talks and if the 1 March deadline for the 90-day truce for fresh tariffs would be extended, the weak NODX patch might possibly drag beyond March into the second quarter of 2019. Following the release of revised fourth quarter 2018 growth estimates last week, MTI opined that the economic growth in 2019 might come in a bit lower than the mid-point of its 1.5 percent to 3.5 percent forecast range.
