China lockdown to weaken Singapore trade
? Singapore’s NODX grew 6.4% yoy in Apr 22, underperforming both our and
Bloomberg consensus estimates.
? China’s ongoing zero-Covid strategy and lockdowns have caused major
supply-chain disruptions and affected Singaporean NODX to the country.
? Export growth could face difficulties ahead stemming from China’s lockdown,
supply chain problems, the Ukraine crisis, and potential recession in the US.
NODX surprisingly robust in Apr 22
Singapore’s non-oil domestic exports (NODX) rose 6.4% yoy in Apr 22 (vs. +7.7% yoy in
Mar 22), underperforming our and Bloomberg consensus estimates. On a seasonallyadjusted (SA) basis, NODX contracted by 3.3% mom SA in Apr 22, a continuation
downwards from the 2.3% mom SA decline seen in Mar 22. Both electronic NODX and
non-electronic NODX grew yoy in Mar 22, but both also declined mom SA in Mar 22. NODX
from Singapore has now decelerated for the 5th consecutive month in a row.
Decline in trade to China likely to continue in May
China’s ongoing zero-Covid policy resulted in major protracted lockdowns throughout the
country and impacted Singapore’s exports to China in Apr. Singapore’s NODX to its top 10
markets as a whole rose by 6.3% yoy in Apr 22, as the NODX value to all but three (China,
Hong Kong, and South Korea) of its top 10 markets rose. NODX to China (-10.6% yoy)
contracted for the first time in 7 months, demonstrating the difficulties arising from China’s
zero-Covid policy stance. Indeed, more than 180 companies around the world have
mentioned terms including “China” and “lockdowns” in their first-quarter earnings calls or
financial statements, according to a Bloomberg News analysis of transcripts and filings.
We expect exports to China to face difficulties in the months ahead. Given that the
lockdown restrictions remain somewhat in place for the month of May, it is likely that we
could still see continued weaker trade data from the country.
Electronic NODX still gaining
Electronics NODX accelerated by 12.8% yoy in Apr 22 vs. +11.5% yoy in Mar 22,
contributing 2.8% pts to (or 43% of) Apr’s NODX growth and marking 17 months of
consecutive yoy increases. The strong growth in electronics was mostly driven by
integrated circuits [ICs] (+13.4% yoy), parts of ICs (+94.2% yoy), and telecommunications
equipment (+25.4% yoy). These three components of electronic NODX drove more than
80% of electronic NODX growth in Apr. Electronic NODX in Singapore as a whole continues
to post robust figures, in our opinion however, the deceleration of ICs to 13.4% yoy in Apr
(vs. +21.0% yoy in Mar) and diodes & transistors to -1.9% yoy in Apr (vs. +0.1% yoy in
Mar) are early signs of the city-state beginning to feel the bite of protracted supply-chain
disruptions.
Outlook dim given a slew of global issues
Export growth could face difficulties ahead. While the lockdown in China may result in a
weaker growth outlook for May, restrictions could ease as Covid-19 cases fall, providing a
respite. Nevertheless, the economic slowdown in the US and possibility of a recession may
spell bigger problems for the city state. On top of that, further rate hikes by the Fed and
ongoing conflict between Russia and Ukraine are likely to negatively affect global demand
and trade in the coming months, further weighing on the prospects of Singapore’s exports.