• Singapore’s total trade rose by 9.6 per cent to reach $928 billion in 2008. This growth is faster than the 4.5 per cent growth in 2007. The continued expansion in total trade was due to increase in oil trade.

• NODX declined by 7.9 per cent in 2008 compared to the 2.3 per cent growth in 2007 due to lower electronic and non-electronic NODX.

• NODX to all the top 10 markets, except for Indonesia and Hong Kong, contracted in 2008. The three markets which made the highest contributions to the NODX decline were the US, the EU-27 and Malaysia.

• NORX growth moderated to 2.0 per cent in 2008, following the previous year’s 3.1 per cent rise, on slower growth of electronic NORX.

• In 2009, total trade is projected to decline by between 17 and 19 per cent, down from the previous forecast of a decline by between 6.0 and 8.0 per cent, while NODX is expected to decline by between 9.0 and 11.0 per cent, down from the previous forecast of between -1.0 and 1.0 per cent.

TOTAL TRADE

Singapore’s external trade rose by a faster pace of 9.6 per cent in 2008 as compared to the 4.5 per cent growth in 2007. The level of total trade increased to a record high of $928 billion in 2008 from $847 billion in the previous year. The continued rise in external trade can be attributed to higher exports and imports, which grew by 5.8 per cent and 14 per cent respectively in 2008.

The expansion in external trade was due to higher oil trade, which grew by 50 per cent. The 50 per cent expansion of oil trade in 2008 was boosted primarily by the record high oil prices for the first three quarters of 2008. Details on the performance of major trade components and key trading markets can be found in Annexes A and B.

NON-OIL DOMESTIC EXPORTS
Non-oil domestic exports (NODX) declined by 7.9 per cent in 2008, compared to the preceding year’s 2.3 per cent increase due to lower electronic and non-electronic NODX.

4.

Electronic NODX contracted by 12 per cent in 2008, following a decline of 9.2 per cent in 2007. The decline in electronic NODX can be attributed to lower sales of consumer electronics, telecommunications equipment and ICs. Non-electronic NODX also contracted by 5.2 per cent in 2008, compared to the previous year’s expansion of 12 per cent. The decrease in non-electronic NODX in 2008 was mainly because of declining domestic exports of pharmaceuticals, disk media products and petrochemicals.

NODX to all the top 10 markets contracted in 2008, with the exception of Indonesia and Hong Kong. The main contributors to the NODX decrease in the year were the US (-23 per cent), the EU-27 (-19 per cent) and Malaysia (-8.8 per cent).

Electronic products. Domestic exports of electronic products (comprising 40 per cent of NODX) contracted by 12 per cent in 2008, following a decline of 9.2 per cent in 2007. The decline in electronic NODX can be attributed mainly to lower domestic exports of consumer electronics (-47 per cent), telecommunications equipment (-38 per cent) and ICs (-6.6 per cent) (See Annex C).

Non-electronic products. Non-electronic NODX (comprising 60 per cent of NODX) contracted by 5.2 per cent in 2008 compared to the 12 per cent growth in 2007. The decline in non-electronic NODX can be attributed to decreases in domestic exports of pharmaceuticals (-33 per cent), disk media products (-12 per cent) and petrochemicals (-5.8 per cent) (See Annex C).

Top 10 markets. NODX to the top 10 markets declined in 2008, with the exception of Indonesia and Hong Kong. In particular, the markets that made the highest contributions to NODX decrease in 2008 were the US, the EU-27 and Malaysia (See Annex D).

NODX to the EU-27 fell by 19 per cent in 2008, following a decline of 1.0 per cent in 2007, with contractions in both electronic and non-electronic domestic exports. Electronic NODX to the EU-27 declined by 4.8 per cent in the year, following the 26 per cent decrease in 2007. The contraction of electronic domestic exports to the EU-27 was led by lower sales of parts of ICs (-53 per cent), telecommunications equipment (-42 per cent) and consumer electronics (-55 per cent). Non-electronic NODX to the EU-27 declined by 25 per cent in 2008 after a growth of 18 per cent in the preceding year, largely driven by decreased shipments of pharmaceuticals (-33 per cent), printing and bookbinding machinery (-99 per cent) and electrical machinery (-29 per cent).

NODX to the US decreased by 23 per cent in 2008 after a 2.7 per cent rise in 2007 due to declines in both electronic and non-electronic goods. Electronic NODX to the US declined by 19 per cent in 2008, following a decrease of 0.4 per cent in 2007. Lower sales of consumer electronics (-82 per cent), parts of PCs (-21 per cent) and telecommunications equipment (-35 per cent) contributed to the decrease. Non-electronic NODX to the US declined by 28 per cent in 2008 after a rise of 7.4 per cent in 2007. This decrease was due to declines in demand for pharmaceuticals (-62 per cent), medical apparatus (-37 per cent) and electrical machinery (-46 per cent).

NODX to China contracted by 2.3 per cent in 2008, compared to the previous year’s growth of 0.7 per cent because of declines in both electronic and non-electronic NODX. Electronic NODX to China decreased by 6.3 per cent in 2008, smaller than the 13 per cent drop in 2007. The decline in electronic NODX to China was mainly due to lower domestic exports of parts of PCs (-20 per cent), consumer electronics (-59 per cent) and bare printed circuit boards (PCB) (-44 per cent). Non-electronic NODX to China contracted by 0.1 per cent in 2008, reversing the expansion of 9.8 per cent in 2007, on declines in disk media products (-12 per cent), primary chemicals (-18 per cent) and petrochemicals (-3.2 per cent).

NODX to Malaysia declined by 8.8 per cent in 2008 after a growth of 4.4 per cent in 2007 due to lower electronic domestic exports. Electronic NODX to Malaysia contracted by 19 per cent, following a decrease of 2.1 per cent in 2007 due to declines in domestic exports of ICs (-40 per cent), capacitors (-43 per cent) and bare PCB (-34 per cent). On the other hand, non-electronic NODX to Malaysia grew by a marginal 0.8 per cent in 2008, following an increase of 11 per cent in the previous year. The continued expansion of non-electronic NODX to Malaysia was led by higher domestic exports of civil engineering equipment parts (+24 per cent), watches and clocks (+46 per cent) and iron or steel scrap (+42 per cent).

NODX to Indonesia rose by 2.7 per cent in 2008 after a contraction of 4.0 per cent in 2007, mainly led by a rise in non-electronic NODX which outweighed the decline in electronic NODX. Electronic NODX to Indonesia decreased by a marginal 0.7 per cent in 2008, following a drop of 22 per cent in 2007 on lower domestic exports of telecommunications equipment (-56 per cent), bare PCB (-54 per cent), and diodes and transistors (-26 per cent). However, non-electronic NODX to Indonesia grew by 3.8 per cent in 2008 following the previous year’s rise of 4.2 per cent mainly attributed to stronger sales of metal manufactures (+50 per cent), iron pipes and fittings (+60 per cent), and civil engineering equipment parts (+18 per cent).

NODX to all of the remaining key markets shrank in 2008. NODX to Thailand contracted by 12 per cent in 2008 compared to the 3.3 per cent growth in 2007 due to lower electronic and non-electronic NODX. Electronic and non-electronic NODX to Thailand declined by 23 per cent and 7.5 per cent respectively in 2008. NODX to South Korea contracted by 0.3 per cent compared to the previous year’s 14 per cent growth, on a decline in electronic NODX which outweighed the rise in non-electronic NODX. In particular electronic domestic exports decreased by 11 per cent in 2008 compared to the 5.8 per cent rise in 2007. Similarly, NODX to Taiwan contracted by 11 per cent in 2008 following the 9.3 per cent decline in 2007 due to decreases in both electronic and non-electronic domestic exports. Electronic domestic exports to Taiwan declined by 16 per cent in 2008 following the previous year’s 22 per cent contraction, while non-electronic domestic exports posted a 4.2 per cent decline in 2008 compared to the strong 15 per cent growth in 2007.

Oil domestic exports increased by 41 per cent in 2008, more than the 6.2 per cent expansion in 2007. The continued expansion of oil domestic exports in 2008 was driven mainly by oil sales to the EU 27, Panama and Hong Kong. In volume terms, oil domestic exports expanded by 8.5 per cent in 2008 after posting a small decline of 0.8 per cent in 2007 (See Annex E).

Non-oil re-exports (NORX) expanded by 2.0 per cent after a rise of 3.1 per cent in 2007 mainly supported by higher non-electronic NORX which outweighed the decline in electronic NORX. Electronic re-exports contracted by 2.5 per cent in 2008 compared to a marginal growth of 0.1 per cent in 2007 on lower re-exports of ICs (-4.8 per cent), telecommunications equipment (-20 per cent) and parts of ICs (-19 per cent). Non-electronic NORX continued to grow by 8.0 per cent in 2008, following the 7.4 per cent rise in 2007, supported by higher re-exports of piston engines (+49 per cent), jewellery (+136 per cent) and non-electric engines and motors (+38 per cent).

NORX to the top 10 markets continued to grow in 2008, except for Malaysia, China and Hong Kong. In particular, the key markets that made the largest contributions to NORX growth in 2008 were Indonesia, the EU-27 and Japan. NORX to Indonesia expanded by 7.6 per cent in 2008 after growing by 11 per cent in the preceding year on higher non-electronic re-exports which outweighed the decline in electronic re-exports. NORX to the EU-27 grew by 11 per cent in 2008 compared to the 2.8 per cent decline in 2007 on strong expansion of electronic NORX which grew to 16 per cent. NORX to Japan expanded by 13 per cent in 2008 as compared to the previous year’s 7.1 per cent contraction on increases in both electronic and non-electronic NORX (See Annex F).

Oil re-exports grew by 58 percent in 2008, up from the 50 per cent expansion in 2007. The rise in oil re-exports in 2008 was led by increased shipments of oil to Indonesia, Vietnam and China. In volume terms, growth of oil re-exports increased by 26 per cent in 2008, following the 41 per cent rise in 2007.

Singapore’s 2008 total trade growth of 9.6 per cent was within the previously projected growth of between 9.0 and 11.0 per cent. The NODX decline of 7.9 per cent in 2008 was lower than the -7.0 and -5.0 per cent forecast due to a larger than expected contraction seen in the final quarter of 2008. Slower growth in our major trading partners in combination with the significant drop in oil prices saw sharper declines in our trade figures for the fourth quarter of 2008.

Going forward, the external environment is expected to deteriorate further in 2009. According to World Bank, global trade volume is also expected to decline by in 2009 (-2.1 per cent), the first contraction in 26 years. Oil prices are expected to recover from the drop in the final quarter of 2008, but not expected to reach the heights of the first three quarters of 2008.

Singapore’s total trade is projected to decline by between 17 and 19 per cent in 2009, down from the previous forecast of a 6.0 to 8.0 per cent decrease. The weaker prognosis for Singapore’s total trade in 2009 is based on the worsening global trade environment since November 2008, led by significant decline in demand by most of our major trading partners. The slide in global trade in late 2008 was exacerbated by the global credit freeze, which restricted export finance.

NODX is expected to decrease by 9.0 to 11.0 per cent, down from the earlier forecast of between -1.0 and 1.0 per cent, taking into consideration the continued weakness in global demand for electronics products and the rapid slowing down in external demand. The key factors underlying the trade outlook for 2009 are as follows:

(a) Major slowdown in the world economy
The developed economies are expected to lead the slowdown in global economic activity, with their real GDP forecasts for 2009 projected to be significantly lower than their estimated growth rates in 2008. Countries such as the US, the EU-27 and Japan are expected to experience negative growth in 2009, due to the ongoing process of deleveraging, deteriorating consumer confidence and rising levels of unemployment.

(b) Slower growth of regional markets
Growth of the key Asian economies is likely to be lower in 2009 compared to 2008 as the impact of slowing developed markets, in particular the US, will have spill-over effects in the region. Despite the slower growth, some Asian economies are still expected to expand in 2009; for example, China’s economy is projected to expand by around 7.4 per cent in 2009. Some Asian economies still expect positive growth for their exports in 2009 albeit slower than their growth in 2008.

(c) Weak global electronic demand in 2009
Global semiconductor sales are expected to grow at a slower pace in 2009 than in 2008, with industry experts expecting greater slowdown in 2009 sales. The worsening macroeconomic conditions and reports of slowing revenue growth have weighed down the chips sector.

(d) Low oil prices
Oil prices are expected to continue to remain volatile in 2009, but are likely to be lower than the average oil prices in 2008, on lower demand for oil due to recessionary fears. Oil prices in 2009 are projected to be around US$50 per barrel, lower than the average of US$100 per barrel in 2008. Singapore’s oil trade growth is projected to decline in 2009 on lower oil prices.

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