Singapore exports surged in May on increased pharmaceutical and gold shipments as traders seek a safe haven from market turmoil but analysts warned Friday the surprise jump did not indicate a wider economic recovery.
Non-oil domestic exports soared 11.6 percent year-on-year for the month, led by prefabricated buildings, pharmaceuticals and gold, trade promotion body International Enterprise (IE) Singapore said.
While Singapore does not have a large domestic market for the precious metal, it is a big regional player in the trade.
Uncertainty in global markets — ranging from a slowdown in the Chinese economy to plunging crude prices — has pushed gold prices 20 percent higher in the last year.
“The increase in exports to Taiwan and India is also helped by a boost in gold trade. The global demand for gold is high as investors are seeking safe havens from the financial unrest in stocks and commodity markets,” said Song Seng Wun, an economist with CIMB Private Banking.
It was also the trade-reliant city-state’s best export performance since a 18.5 percent year-on-year jump in March 2015.
IE Singapore said non-electronics shipments, including pharmaceuticals and petrochemicals, expanded by 19.0 percent, reversing the previous month’s 8.1 percent decline.
There was a notable surge in demand from the United States and Taiwan, both major markets for Singapore.
Exports to the US grew 9.1 percent while those to Taiwan leaped 11.2 percent in May.
But analysts said May’s figures could be an abnormality as there was little indication of a real turnaround in global economic fortunes.
“We hesitate to jump for joy and call for a turnaround in the exports outlook as this out-performance was really based on a few narrow segments, in particular gold,” UOB wrote in a research note.
Song said the improved US figures came from an unusual boost in pharmaceutical shipments while Taiwan received a bulk of Singapore’s pre-fabricated buildings in a one-time deal.
Meanwhile, there was a notable dip in demand from the European Union and China.
Exports to the EU plunged 14.0 percent from 20.6 percent growth in April while shipments to China dropped 10.1 percent, worse than the 7.4 percent decline in April.
The government projects economic growth at 1.0-3.0 percent this year, but private sector economists expect it to come in at the lower end of the range. The economy grew 2.0 percent last year.