[SINGAPORE] Economists believe that front-loading activity may have started slowing down, after Singapore’s key exports declined 3.5 per cent on the year in May after April’s surge.
The latest non-oil domestic exports (NODX) print reversed from the preceding month’s 12.4 per cent jump and disappointed market expectations of 7.8 per cent growth, data from Enterprise Singapore showed on Tuesday (Jun 17). Shipments to most major trading partners fell, electronics NODX softened, and non-electronics exports contracted.
RHB group chief economist Barnabas Gan and associate research analyst Laalitha Raveenthar noted that economists had anticipated some potential upside from continued front-loading of exports during the 90-day trade truce, particularly between the US and China.
The latest data could indicate that the boost from front-loading ahead of higher US tariffs is fading rapidly, they said.
While Maybank analysts Chua Hak Bin and Brian Lee also acknowledged that the front-loading boost “could be starting to cool”, they also pointed to “idiosyncratic factors in the form of non-monetary gold and petrochemicals” that amplified May’s NODX decline.
Year on year, electronics exports gained 1.7 per cent in May, against April’s 23.4 per cent expansion. PCs (50.9 per cent), integrated circuits (4.3 per cent) and consumer electronics (49 per cent) led the growth.
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Although still expansionary, electronics exports have slowed and are “susceptible to downside risks from US levies on semiconductor imports that could still be on the cards”, said DBS senior economist Chua Han Teng.
Meanwhile, non-electronics shipments contracted 5.3 per cent on the year, in a turnaround from the 9.3 per cent rise in April. The main drivers of the fall were petrochemicals (-17.8 per cent), non-monetary gold (-25.9 per cent) and specialised machinery (-11.7 per cent).
“Safe-haven gold demand eased on the back of the US-China tariff de-escalation,” noted Maybank’s duo. They added that petrochemical shipments, “plagued by weak downstream demand and oversupply from China’s capacity expansion”, has been lacklustre for some time.
In contrast, pharmaceutical exports remained positive. UOB associate economist Jester Koh said this possibly reflects some effects of front-loading, on fears of the implementation of threatened sectoral tariffs.
This is despite Deputy Prime Minister Gan Kim Yong’s comment last month that Singapore may get a preferential tariff or exemption for pharmaceutical exports to the US, based on ongoing talks.
NODX to six of Singapore’s top 10 markets slid. Key exports to the US (-20.6 per cent) and Thailand (-17 per cent) declined by double-digits. NODX to Malaysia, China, the European Union and Japan also fell, from the year-ago period.
Meanwhile, NODX to Hong Kong, South Korea, Indonesia and Taiwan still grew on year in May – but the expansions were significantly weaker than the year-on-year growth recorded in April.
The sluggish NODX outturn was not a huge surprise, said Koh, noting evidence of slowing export activity, such as month-on-month contractions in South Korea and Taiwan’s imports from Singapore in May.
Headed for worse
Economists expect Singapore’s trade data to continue to face pressure.
RHB’ team expects a further slowdown in the coming months despite the temporary reprieve from reciprocal tariffs, as global demand eases and consumer spending weakens ahead of anticipated heavier duties later in the year.
Despite the seeming de-escalation of tensions between the US and China, they “advise caution against premature optimism”.
Observers agreed that the impacts will particularly be felt in H2, on the back of front-loading payback and potential for further tariff developments.
The Maybank team said the magnitude of the payback and slowdown will depend on tariff outcomes for trading partners after the reciprocal tariff truce ends on Jul 8, while UOB’s Koh flagged the possibility of a “more protracted downturn”.
Koh also noted that escalating geopolitical tensions in the Middle East could further dampen business and consumer confidence.
UOB downgraded its full-year 2025 NODX forecast to between 1 and 3 per cent, from 2 to 4 per cent previously.
The situation remains fluid, Koh said, noting that US President Donald Trump last week said he intended to send letters to trading partners to set unilateral tariff rates ahead of the expiry of the pause on reciprocal tariffs – a development that markets are watching closely.
Economists are also keeping an eye out for the US’ threatened sectoral tariffs.
On a seasonally adjusted monthly basis, NODX contracted 12 per cent, reversing from the preceding month’s 10.4 per cent expansion.
Overall, total trade increased 1 per cent from the corresponding year-ago period in May, narrowing from the 14.7 per cent expansion in the preceding month. Total exports rose by 2.5 per cent, following April’s 22.1 per cent. Total imports declined by 0.5 per cent, after the previous month’s 6.9 per cent increase.
