(SINGAPORE) After a slim year-on-year gain of 1.8 per cent in the first six months of 2007, non-oil domestic exports got off to a promising start in the second half by growing 5.5 per cent in July.
The rate of growth beat market expectations of 4.6 per cent and was the fastest pace in six months, following expansion of just 1.2 per cent in June.
Although domestic exports of electronic goods, which account for about 40 per cent of NODX, fell for a sixth straight month in July, the 10.6 per cent decline was the smallest drop in six months.
And according to economist Song Seng Wun of CIMB: 'With a less demanding year-ago base, tech exports should do better in the second half.'
Non-oil re-exports (NORX) grew 11.2 per cent in July - again the fastest pace in six months, boosted by stronger electronics and non-electronics NORX, and pointing to improving regional demand.
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IE Singapore's press release
'While the current volatility in the financial markets may still affect the real economy in the coming months, the macro fundamentals of Asian economies, especially Singapore at this juncture, remain largely intact,' Mr Song said.
Month-on-month, July's figures - released yesterday by trade promotion agency International Enterprise (IE) Singapore - are not so impressive. Seasonally adjusted NODX growth was just 0.5 per cent up from June, against 2.9 per cent in June from May, causing some economists to have reservations.
Citibank's Chua Hak Bin told Reuters: 'The figures partly confirm that the tech recovery will be sluggish in the second half and dim the outlook for the manufacturing sector.
'Asian electronics manufacturers could see a contraction in orders. The slowdown in electronics exports can be protracted because US consumer confidence has been hit by the problems in the housing sector.'
Still, non-electronics NODX has shown it is capable of picking up at least some of the slack. Led by pharmaceuticals, non-electronics shipments rose 20.3 per cent in July, after a 13 per cent increase in June.
'Pharmaceutical exports will continue to underscore Singapore's export growth,' said CIMB's Mr Song.
Singapore also seems to be as diversified in the markets it exports to as in the goods it exports. Although shipments to major markets like the US, Indonesia, Taiwan and Hong Kong fell in July, those to the rest of Singapore's 10 largest markets rose.
'Specifically, the EU 27, South Korea and Japan made the biggest contributions to NODX expansion in the month,' said IE Singapore. Shipments to the EU jumped 23 per cent, from 13 per cent in June. Those to Korea increased 29 per cent and those to Japan rose 15 per cent.
'It is encouraging to note that the EU, Japan, China (and others) have taken up the slack in exports to the US,' Mr Song said. 'This could be an indication that slower US economic growth in the coming months may not hurt export-dependent Asian economies as severely as previous US down-cycles.'
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