Singapore’s trade rebounds in Q1 2024 amidst prolonged decline in non-oil exports since 2021

Following a challenging end to 2023, Singapore’s trade sector has bounced back in the first quarter of 2024.

According to the latest release from Enterprise Singapore, there was a 4.8% year-on-year increase in total merchandise trade, effectively reversing a 2.1% decline from the fourth quarter of the previous year.

This uptick was driven by significant improvements in both oil and non-oil trade segments.

In the oil sector, trade grew by 3.4%, recovering from a 3.3% decline in the preceding quarter. This growth was largely fueled by rising global oil prices.

Meanwhile, non-oil trade rose by 5.2%, overcoming a previous drop of 1.8%. This indicates strong demand for non-oil commodities and underscores the diversified nature of Singapore’s trade base.

However, not all segments experienced growth. Non-oil domestic exports (NODX) saw a 3.4% decline, largely due to significant reductions in non-electronics exports, especially volatile sectors like pharmaceuticals.

NODX started to decline from its last peak in the fourth quarter of 2021 (post-COVID), became negative from the fourth quarter of 2022, and has remained negative through the first quarter of 2024.

Despite this setback, the pace of decline was milder compared to earlier quarters.

On a brighter note, re-exports (NORX) surged by 8.4%. This growth is attributed to substantial increases in both electronics and non-electronics re-exports, signaling robust international trade relay activities through Singapore.

This is particularly evident in the electronics sector, where, despite an overall decline, the contraction of electronic exports eased to 1.6% from a sharper 9.9% drop in the previous quarter.

The non-electronics sector, though facing a 3.8% decline in exports driven by drops in pharmaceuticals, ship structures, and electrical circuits, saw positive movements in some areas. Non-electronic re-exports like non-electric engines and specialized machinery posted significant growth.

Despite declines in NODX to major markets such as the EU 27, the US, and Japan, re-exports to regions like Hong Kong, Thailand, and Malaysia experienced substantial growth.

The services sector also showed strong performance, with total services trade increasing by 7.5% to reach S$224 billion. This was largely driven by an 8.0% expansion in services exports, bolstered by increases in transport and travel services.

Looking ahead, the economic outlook for 2024 remains cautiously optimistic. Despite some underperformance in NODX, forecasts for both total merchandise trade and NODX are maintained at a growth rate of 4.0% to 6.0%.

This optimism is supported by anticipated recoveries in the electronics sector in the second half of the year and favorable global economic projections, with global economic activity expected to grow by 3.2%.