S'pore April exports fall again amid weak global demand
Bloomberg file photo
SINGAPORE — The Republic’s non-oil domestic exports (NODX) contracted for the second straight month in April, showing that exporters are still struggling with weak external demand, with analysts saying this raises the likelihood of further monetary policy easing by the central bank amid a cloudy economic outlook.
NODX fell 7.9 per cent last month compared to the same month a year ago, moderating from the revised 15.7 per cent decline in March, said trade agency International Enterprise Singapore on Tuesday (May 17). The performance was slightly better than the 8.4 per cent decline that economists had expected in a Bloomberg poll.
“The decline has been broad-based with contractions in exports of both electronics and non-electronics products. Moreover, except for Europe and Hong Kong, export growth to all key markets was in the red, underscoring the persistent weakness in global demand,” said DBS senior economist Irvin Seah.
Among the eight of Singapore’s top 10 NODX markets that fell last month, Taiwan, South Korea and Indonesia registered the biggest declines. Shipments to China, Singapore’s largest export destination, slumped for the tenth straight month, and while the pace of decline slowed to 7.4 per cent last month from the 14 per cent plunge in March, that was little comfort.
“We are not out of the woods yet as far as export performance is concerned. Manufacturers/exporters are still struggling with weak demand and this will eventually manifest itself in the headline gross domestic product growth figures. All is not well on the external front. Time to tighten the belt,” said Mr Seah.
The cloudy outlook could lead to further monetary policy easing, after the Monetary Authority of Singapore (MAS) last month unexpectedly eased the Singapore dollar to a neutral stance from one of modest and gradual appreciation against the currencies of its major trading partners, as growth in the first quarter stalled.
“There is an overhanging risk of monetary easing. There is a good chance that dismal exports could see further downside to Singapore’s economic growth, which could evolve to a broader base weakening, putting a cap on inflationary pressures due to weak demand. Core inflation could undershoot the forecast set by the central bank,” said ANZ Research economist Ng Weiwen.
The MAS and the Ministry of Trade and Industry said last month in their monthly consumer price index statement that the core inflation forecast for this year is likely to be in the lower half of the 0.5 to 1.5 per cent range, barring a sharp rise in global oil prices. Core inflation is the central bank’s preferred gauge for monetary policy decisions.
However, Mr Ng added: “There is a higher hurdle for easing to happen again (at the MAS’ October meeting) as the central bank has made the policy move in April and would leave room for re-centering,” he said.
Last month, shipments of electronic products contracted by 7.4 per cent, compared to the 9.1 per cent fall in the previous month. The decline was largely due to the fall in exports of personal computers, PC parts and integrated circuits.
Shipments of non-electronic products fell by 8.1 per cent, compared to the 18 per cent contraction in the previous month. The plunge was led mainly by the fall in the exports of structures of ships and boats, petrochemicals and civil engineering equipment parts.
