Latest news with #ChuaHanTeng
Business Times
22-05-2025
- Business
- Business Times
Downside risks could intensify for exporters once 90-day tariff truce expires: EnterpriseSG
[SINGAPORE] Singapore's key exports increased 3.3 per cent in Q1 2025 ended March, higher than the 2.4 per cent expansion in the previous quarter. Enterprise Singapore (EnterpriseSG) said on Thursday (May 22) that non-electronic domestic exports – which made up 79 per cent of non-oil domestic exports (NODX) – rose 1.8 per cent year on year in Q1 2025, reversing the 0.7 per cent contraction in the previous quarter. The increase was largely driven by strong gains in non-monetary gold – which rose by 86.5 per cent – and ship and boat structures, which surged by 637.4 per cent. Meanwhile, electronics domestic exports, which accounted for 21 per cent of total NODX, expanded 9.5 per cent, easing from the 14.2 per cent growth recorded in Q4 2024. Growth was led by personal computers and disk media products, which rose 69.8 per cent and 35.8 per cent, respectively. NODX to key markets saw robust improvement in the first quarter of 2025, with shipments to the US rising 19.2 per cent, Taiwan climbing 55.5 per cent, and Hong Kong increasing 24.7 per cent. In April, key exports exceeded expectations with a 12.4 per cent increase on front-loaded shipments amid US President Donald Trump's tariff truce. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up But for the full year, EnterpriseSG said, the external outlook has softened amid tariff and trade policy uncertainties, though global growth remains supportive. The International Monetary Fund projects the global economy to grow by 2.8 per cent, with key trade partners such as China, the US, EU-27 and Asean-5 showing growth. Meanwhile, the World Trade Organization expects a slight 0.2 per cent contraction in global merchandise trade volumes. Domestically, about 30 per cent of pharmaceuticals and transport engineering firms anticipate new export orders in the second quarter. Taking these factors into account, Enterprise SG maintains the NODX growth forecast for 2025 at between 1 and 3 per cent growth. The lower bound reflects a cautious outlook for the second half of the year due to evolving tariff risks. Despite the recent easing of US-China trade tensions, downside risks could intensify once the 90-day reciprocal tariff reprieve expires, the agency added, saying: 'These risks include weaker-than-expected demand from key partners and slower growth in major export products.' DBS senior economist Chua Han Teng noted that exporters are expected to capitalise on temporarily lowered tariffs during the 90-day reciprocal truce between the US and China, which began in mid-May. This is likely to result in front-loaded orders – a move likely to bolster Singapore's trade performance in the near term. However, he cautioned that this early boost could be followed by a 'payback period' in the second half of 2025, with trade and production growth slowing as a result. 'While the temporary de-escalation of US-China tensions is encouraging, global trade frictions remain elevated compared to pre-Trump 2.0 levels,' Chua added. He also pointed to lingering uncertainties over US tariff negotiations, including the potential imposition of new duties on semiconductors and pharmaceutical products – two key pillars of Singapore's export base. Meanwhile, Singapore's re-exports had increased by 8.3 per cent, following the 14.2 per cent expansion in the previous quarter. The growth in non-oil re-exports was mainly due to higher shipments of both electronics and non-electronics. Re-exports of electronic products rose by 14.4 per cent year on year in the first quarter of 2025, easing slightly from a growth of 16.4 per cent in the previous quarter. The increase was primarily driven by stronger re-exports of parts of personal computers, which surged by 263.4 per cent, integrated circuits, which rose by 7.8 per cent, and telecommunications equipment, which increased by 20.9 per cent. Non-electronic re-exports also registered growth, rising by 1.2 per cent in Q1 2025, though this marked a moderation from the 11.8 per cent expansion recorded in the fourth quarter of 2024. Key contributors to this growth included higher re-exports of copper, which surged by 396.4 per cent, non-electric engines and motors, up by 16.8 per cent, and specialised machinery, which increased by 12.8 per cent. Re-exports to Singapore's top 10 markets as a whole expanded in the first quarter of 2025. The strongest contributors to this growth were Taiwan, which surged 125.7 per cent; the US, which increased by 53.3 per cent; and Vietnam, which rose by 25.9 per cent. Trade performance Singapore's total merchandise trade expanded by 4.9 per cent year on year in the first quarter of 2025, moderating from the 6.8 per cent growth recorded in the previous quarter. Total exports rose by 3.6 per cent, compared to 5.1 per cent in Q4 2024. This was supported by a 6.7 per cent increase in non-oil exports, even as oil exports declined by 10 per cent. Total imports grew by 6.4 per cent, easing from the previous quarter's growth of 8.7 per cent. On a year-on-year basis, Singapore's total services trade increased by 3.8 per cent in Q1, moderating from a 7.4 per cent growth in Q4 2024. Services export and imports rose by 4 per cent and 3.7 per cent, respectively. The growth in services exports was driven mainly by higher receipts from financial services, which increased by 7.7 per cent; other business services were up 3.7 per cent; and transport services, which grew by 2.1 per cent.
Business Times
05-05-2025
- Business
- Business Times
GE2025: Ruling party's strong showing signals flight to safety and a vote for policy continuity, say analysts
[SINGAPORE] Analysts welcomed the results of Singapore's general election (GE) held over the weekend, calling them a vote for political stability and policy continuity for investors. Citi said in a report on Monday (May 5) that the strong mandate won by the ruling People's Action Party (PAP) puts to rest any fears of a lurch towards populism and its attendant fiscal risks. It inspires confidence in policy continuity, which translates to better predictability and investor confidence in a pro-business approach, the bank added. It also noted that historically, the Singapore dollar and PAP vote share have a negative correlation. But the impact this time could be the opposite if the vote points to Singapore's 'safe-haven' appeal. Any 'unwanted... appreciation pressures' would be partially offset by lower short-term interest rates, Citi said. On the other hand, Singapore equities tend to have a positive correlation with the ruling party's vote share. Ahead of the market session on Monday, OCBC's managing director of investment strategy Vasu Menon told The Business Times that the local bourse could 'enjoy decent gains' from the PAP's strong showing, Wall Street's rally last Friday, and upbeat US jobs data. The Singapore bourse kicked off the week higher, but gave up most of its gains by the afternoon. In Saturday's GE, the PAP raised its overall share of votes to 65.57 per cent, up 4.33 percentage points from GE2020's 61.24 per cent. The Workers' Party (WP) kept its 10 existing seats in Hougang SMC and Aljunied and Sengkang GRCs, but failed to gain any ground in the other wards it contested. None of the other opposition parties won a seat. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Regarding business-linked government moves, Citi believes the poll results are likely to cement continuity in current policies. These include a continued inflow of foreign workers once the cyclical downturn has run its course, with the share of foreign workers continuing to rise even after the 'watershed elections in 2011'. While social expenditures will continue to grow, the government will resist pressure to use more investment returns as revenue. DBS senior economist Chua Han Teng shares a positive view of the election: 'PAP's strong mandate will reassure investors of ongoing political stability and policy continuity, that has potential to enhance the already favourable business environment that will serve Singapore well over the coming years.' He expects the PAP government to balance between providing immediate economic support with long-term priorities of improving growth as well as addressing rising social needs. These include more targeted fiscal support for businesses and workers, complementing monetary policy easing this January and April, Chua said. 'Measures will likely prioritise local small and medium-sized enterprises with lesser resources and greater constraints, and especially those engaged in goods exports business, which will be particularly vulnerable to the direct and indirect impacts of US tariffs,' Chua added. Maybank analysts said: 'The margin of victory by the incumbents could reflect on the preference of both electorates for stability as the external environment becomes more challenging.' OCBC's Menon added: 'A well-managed economy, run by a stable government, is often welcome news for investors, given the current uncertain global economic environment, and this should have at least some positive immediate benefits for the local bourse,'
Business Times
25-04-2025
- Business
- Business Times
Potential slight downgrade in Q1 GDP growth after March factory output expansion misses: economists
[SINGAPORE] Private-sector economists are watching for a potential downward revision to Q1 2025 gross domestic product growth from the advance estimate, after manufacturing output underperformed in the quarter. The Republic's factory output gained 5.8 per cent year on year (yoy) in March, strengthening from the previous month's upwardly revised growth of 0.9 per cent, data from the Economic Development Board (EDB) showed on Friday (Apr 25). This was as manufacturing for the key electronics cluster recovered. But the latest reading missed private-sector economists' forecasts of an 8.1 per cent expansion in a Bloomberg poll. It also came amid a favourable base effect, economists pointed out. Excluding the volatile biomedical sector, March's industrial production rose 4.9 per cent on the year, up from February's revised growth of 2.8 per cent. On a seasonally adjusted monthly basis, manufacturing output fell 3.6 per cent in March. Excluding biomedical manufacturing, output decreased 0.8 per cent month on month. OCBC, UOB, Barclays and Maybank economists noted that advance GDP growth estimates of 3.8 per cent yoy for Q1 factored in a 5 per cent growth on year for the manufacturing sector. March's industrial production outturn translates to a possible one percentage point downward revision to the first quarter's manufacturing growth to 4 per cent, they said. This hence implies a downgrade of Q1 GDP growth estimate to about 3.6 per cent, assuming other conditions remain unchanged. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Darker skies ahead DBS senior economist Chua Han Teng believes that the outlook for the export-oriented manufacturing sector will likely weaken – especially for the second half of this year. Singapore's factories 'remain vulnerable to the heightened unpredictability and uncertainty from the US tariff roller coaster', he said, adding that base effects will also be high in H2. Various US consumer surveys are already reflecting a slump in consumer sentiment, added UOB associate economist Jester Koh. Furthermore, weaker successive readings in sub-indices of Singapore's overall Purchasing Managers' Index are 'early signals of intensifying headwinds in the manufacturing sector', he said. Maybank's Chua Hak Bin and Brian Lee expect exports and manufacturing output to turn negative in H2, if US President Donald Trump's sweeping tariffs remain in place. This despite the 'silver linings' they highlighted that could cushion the sector. A lower effective tariff rate is levied on Singaporean goods compared to other countries in the region, due to exemptions of certain products from the reciprocal tariffs. Supply chains could also be moved in Singapore's favour, given that the city-state is subject only to baseline tariffs. They also believe that front-loading could continue in Q2, during the 90-day reprieve for reciprocal tariffs and temporary exemptions on some electronics goods. OCBC chief economist Selena Ling said that the domestic manufacturing outlook 'remains uncertain', depending on the outcome of negotiations during the 90-day suspension period for reciprocal tariffs, and the extent that dampening effects on business and consumer confidence impacts global demand conditions. However, she added: 'Even assuming that some of the tariffs – especially on China – are partially unwound over time, if companies have put on hold their capex, investments or hiring intentions, this would still imply some downside growth risk.' Still, she thought that the official forecast of 0 to 2 per cent growth, revised downwards earlier this month, 'appears to have accommodated a significant slowdown in the coming months'. Barclays analysts Brian Tan and Liu Hongying disagreed, saying that the cut 'appears to be backward-looking, incorporating mainly the Q1 GDP downside surprise – and not necessarily significant future tariff-related weakness'. They believe that policymakers are 'still too hopeful'. Performance by cluster Half the clusters tracked reported increases in production yoy. Output in the key electronics cluster recovered strongly in March, surging 8.9 per cent after reporting a mere 0.2 per cent expansion in February. Most segments within the cluster – semiconductors (8.2 per cent), infocomms and consumer electronics (14.1 per cent) and other electronic modules and components (1.6 per cent) – recorded growth, with only the output from computer peripherals and data storage (-2.9 per cent) shrinking. But while electronics performance is still healthy, it is 'slightly disconcerting' that the precision engineering cluster is 'already softening' (-0.1 per cent), especially for precision modules and components, said OCBC's Ling. This could suggest that some front-loading momentum could be subsiding, potentially due to the heightened tariff uncertainties, she said. Ling also noted that the chemicals cluster (-6 per cent) was a 'key drag'. Output also slid for general manufacturing (-13 per cent). The 'silver linings' were the resilient growth in transport engineering (20.2 per cent) and volatile biomedical manufacturing (17.2 per cent), she said. EDB noted that the transport engineering's aerospace segment (30.9 per cent) was bolstered by higher production of aircraft parts and more maintenance, repair and overhaul jobs from commercial airlines. Meanwhile, chemicals' pharmaceuticals segment (44.1 per cent) recorded higher production of biological products as well as a different mix of active pharmaceutical ingredients being manufactured compared to the previous year. DBS' Chua flagged that while the electronics and biomedical clusters improved, they remain susceptible to downside risks from Trump's threatened levies on semiconductor and pharmaceutical imports. As the city-state is deeply integrated into the global semiconductor supply chain, it is indirectly vulnerable to a broader US tariff-induced semiconductor downturn, he said. Singapore faces higher downside growth risks from US pharmaceutical import duties, compared to some of its Asean peers, he added. If introduced, these targeted tariffs' impact will be significant, agreed Maybank's team, as the two sectors account for about 38 per cent of Singapore's manufacturing.
