Singapore | A turnaround in exports bodes well for growth recovery

Weak imports, rather than strong exports, boosted Singapore’s growth last year. Indeed, its goods exports lagged those of regional peers. But exports have started to rebound as the global vaccine rollout has boosted hopes for a global growth recovery. We expect the improved external environment to boost exports this year and support Singapore’s growth recovery. Its role as a global trading hub, its composition of exports, and the plunge in oil prices negatively affected overall exports last year. We think these factors will become more favourable and support stronger exports in 2021.

What you will learn from this report:

• Singapore’s trade activities have been hit especially hard during the pandemic due to its unique role as an intermediary trading hub. We forecast the improved global growth outlook will underpin a strong rebound in re-exports and sustain solid growth in non-oil domestic exports (NODX) growth.

• Exports will contribute significantly to Singapore’s GDP growth this year. Based on the headline figures, we calculate that goods exports will add 8.2ppts to GDP growth in 2021.
• However, this contribution is boosted by high foreign value-added content of re-exports. We estimate that the domestic value-added contribution of exports to GDP growth will rise to 1.7ppts in 2021 from 1.3ppts in 2020.
• The current account surplus soared last year due to imports falling more than exports, as domestic demand plunged during the strict lockdown in Q2 2020. As activities normalize, we forecast the trade surplus and therefore the current account surplus will narrow this year.