Unexpectedly impressive NODX jump a mere blip, analysts warn

A real turnaround is not yet in sight.

Singapore surprised analysts with a 2.1% year-on-year growth in its non-oil domestic exports for February, far outstripping consensus estimates of a 0.8% year-on-year contraction.

However, analysts note that the surprising expansion is nothing more than a one-off blip, as the year-on-year figure was boosted by an incredibly low base last year.

“We think that the better-than-expected NODX performance in February is just a one-month wonder, as it was mainly due to the low base in the same month a year ago. In fact, looking at the January-February performance together, NODX contracted 4.7% y/y in 2016. Going forward, we are projecting that NODX will be back in the contractionary mode in the next 2 months,” said UOB Economist Francis Tan.

Tan stressed that although February NODX seemed to have turned around, this is no cause for cheers as first-half NODX performance is likely to remain weak. Tan expects NODX to contract 3.1% year-on-year in the first six months of the year.

And as major economic indicators are expected to remain weak in the first half, Tan said that the key question now is whether there could be some form of monetary stimulus from the Monetary Authority of Singapore in its upcoming April monetary policy meeting.

“For now, we view that the possibility of the MAS lowering the SGD NEER slope as very low because any lowering of the slope will mean that the SGD NEER is on a neutral appreciation path,” Tan noted.

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