Electronics exports to improve in 2020

MAS is expected to maintain a slight appreciation bias for the $NEER in April.

Singapore’s electronic exports are expected to improve in 2020, with a partial US-China trade deal likely to help revive global capex and exports, according to a Maybank Kim Eng report.

Already, the purchasing managers’ index (PMI) for electronics has been inching up since September, nearly approaching an expansion (49.9) in December. The overall PMI has already exceeded 50.

With that, MAS is expected to maintain its policy of a slight appreciation bias of the $NEER in the April meeting following the easing in October, as manufacturing and trade emerges out of recession.

Furthermore, GDP growth is expected to recover to 1.8% in 2020, from the decade-low of 0.8% in 2019. An improved business confidence, brought by a US-China Phase One trade deal, may likely trigger a capex and exports recovery around the region, Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye said.

Non-oil domestic exports (NODX) recovered 2.4% in December, mainly on a surge in gold (127.8%) and pharma exports (34.7%) from last year’s low base. However, electronics exports continued to contract 21.3%.

For the full 2019, NODX fell 9.2%, the worst pace of decline recorded since the 10.5% slip during the 2009 Global Financial Crisis.