Exports slide may prompt Q4 growth downgrade
Containers are stacked at the Keppel Container Terminal, operated by PSA International Pte Ltd. Bloomberg file photo
SINGAPORE — The Republic’s non-oil domestic exports (NODX) trailed expectations last month amid declines in shipments of both electronic and non-electronic goods as the drop in sales to China worsened, prompting analysts to warn that economic growth for the final quarter of last year may be downgraded.
NODX fell 7.2 per cent last month from December a year earlier, deepening from the revised 3.4 per cent decline in November, trade agency International Enterprise (IE) Singapore said today (Jan 18). The decline was worse than the 5.1 per cent drop economists had forecast in a Reuters poll.
“The worse-than-expected performance in December NODX was a sad but fitting end for Singapore’s export sector to 2015 as it aptly reflected the negative outlook that was experienced for global trade in 2015 and likely to continue for the months ahead,” said UOB senior economist Alvin Liew.
DBS senior economist Irvin Seah said: “The gross domestic figures for the fourth quarter of 2015 could be revised downwards. With today’s NODX below expectations, it suggests slower manufacturing growth.”
Advanced estimates from the Ministry of Trade and Industry early this month showed Singapore’s economy growing 2 per cent year-on-year in the fourth quarter of 2015, bringing total GDP growth for the year to 2.1 per cent. The manufacturing sector for the quarter contracted 6 per cent.
“The actual figures for the manufacturing sector could potentially come in weaker than the advanced
estimates, and that would shave the actual fourth-quarter GDP lower,” said Mr Seah. He said he was unable to give an estimate until industrial production data for December is released later this month.
Last month, shipments of non-electronic products slumped 10.3 per cent, deepening from the 5.1 per cent decline the previous month, due mainly to a decline in exports of petrochemicals, primary chemicals and civil engineering equipment parts.
Shipments of electronic products fell by 0.3 per cent, reversing from the 0.6 per cent rise in the previous month, due mainly to a decline in exports of integrated circuits, personal computer parts and disk drives.
Shipments to seven out of Singapore’s top 10 NODX markets fell last month, the IE data showed. The top contributors to the decline were China, South Korea and Taiwan, while exports to the United States, Japan and Hong Kong rose.
Shipments to China fell by 18.7 per cent, more than doubling the 9.1 per cent pace of decline in November and marking a sixth consecutive month of contraction. Concerns have intensified over slowing growth in China, Singapore’s top export destination, after data showed manufacturing activity in Asia’s largest economy slowed for the tenth straight month in December. China will release its fourth-quarter and full-year GDP tomorrow.
Fourth-quarter growth in China is expected to slow to 6.8 per cent year-on-year from 6.9 per cent in the third, while full-year growth is expected to slow to 6.9 per cent from 7.3 per cent in 2015, a Reuters poll showed.
“Exporters are indeed undergoing challenging times. Beyond the medium-term structural decline, deceleration in China and an uneven recovery in the US are still weighing down on export performance,” said Mr Seah. “Moreover, a resilient Singapore dollar is another concern. Although the Singapore dollar has depreciated against the US dollar, it has been fairly resilient against currencies of its key Asian export markets, such as the ringgit and the yuan.”
