Singapore exports slip back into contraction in October
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SINGAPORE — The Republic’s exports relapsed into contraction last month after an unexpected rebound in September, with a surge in pharmaceutical shipments failing to offset a decline in electronic products. Analysts say the outlook remains lacklustre for the rest of the year amid patchy global demand and slowing economic growth in China.
Non-oil domestic exports (NODX) fell 0.5 per cent last month compared to a year ago, reversing from the 0.3 per cent expansion in September, trade agency IE Singapore said today (Nov 17).
Shipments of electronic products fell by 3.2 per cent, in contrast to the 5.7 per cent rise in the previous month, due mainly to a decline in exports of integrated circuits, integrated circuit parts and personal computer parts.
Non-electronic products grew by 0.7 per cent, reversing from the 1.9 per cent decline the previous month. The expansion was led in part by a 44.6 per cent surge in exports of pharmaceuticals, up from the 6.5 per cent increase in September.
“For October, it was the drugmakers who came to our rescue,” said CIMB private banking economist Song Seng Wun. “The jump in drugs was the main reason why the headline NODX for October exceeded the economist consensus forecast of a 3 per cent year-on-year fall despite the contraction from exports of electronic products.”
Seven out of the top 10 NODX markets contracted last month, with the exceptions being Japan, the European Union and Hong Kong. The top contributors to the decline were China, Taiwan and South Korea.
Shipments to China, Singapore’s top destination for exports, contracted for the fourth consecutive month to fall by 8.7 per cent, moderating from the 12.9 per cent plunge the preceding month.
“China is growing at a slower pace now and that step down in growth will have impact on all fronts. For Asian exports to China to pick up pace, we have to see China’s growth stabilising and global growth strengthening - neither of which is the case yet. So it looks like it is still going to be a tough few months ahead for Singapore manufacturers. Singapore’s manufacturing sector may not come out of its current recessionary conditions until second half of next year,” noted Mr Song.
Singapore’s weak trade figures mirror those around the region.
“Exports from key Asian exporters including China, South Korea and Taiwan have remained in contraction in the month of October. This suggests that growth (for Singapore’s exports) will likely remain lackluster in fourth quarter of this year,” said UOB economist Ho Woei Chen. He expects Singapore’s exports to contract 1 per cent this year. The official full-year forecast for NODX is an expansion of between 1 to 2 per cent.
With Singapore’s final print for third-quarter gross domestic product (GDP) scheduled to be released next week, Mr Ho added that the economy could see a revisit of a technical recession, generally defined as two consecutive quarter-on-quarter contractions. Advance estimates released last month showed Singapore narrowly escaped a technical recession by a hair’s breadth in the third quarter after GDP grew marginally by 0.1 per cent on a quarter-on-quarter seasonally adjusted annualised basis.
“Based on September industrial output, we see some downside risk to the third quarter growth rate and we could also see fears of technical recession being revisited,” he said.
