Exports of locally made goods plunged back into negative territory in September after coming in flat in August, reflecting the global pressures that Singapore’s trade-dependent economy faces. On a year-on-year basis, non-oil domestic exports (Nodx) fell 4.8 per cent in September, as shipments of both electronic and non-electronic goods declined, trade agency International Enterprise (IE) Singapore said on Monday (Oct 17). Although the performance was slightly better than the median forecast of a 6 per cent slump in a Reuters poll, analysts noted that it represented the sixth time that Nodx have shrunk this year.
On a month-on-month seasonally adjusted basis, exports grew 2.4 per cent in September, reversing August’s 1.9 per cent contraction and beating Reuters’ forecast of a 1.5 per cent rise.
“Exports in Singapore continue to lose steam and the year-on-year Nodx decline in September 2016 is not surprising in view of the challenging external environment.
“The consolation is that the month-on-month exports have changed from negative to positive growth, partly reflecting the stronger year-end demand. However, the plight of weak exports is unlikely to disappear until there is a significant improvement in the external demand,” said Dr Tan Khay Boon, senior lecturer, SIM Global Education.
Shipments of non-electronic products contracted 4 per cent last month from September a year earlier, after increasing 2.7 per cent in August. The decrease was led by structures of ships and boats, civil engineering equipment parts and petrochemicals.
Meanwhile, shipments of electronic products contracted by 6.6 per cent, accelerating from the previous month’s 6 per cent decline, on the back of a fall in the exports of integrated circuits, disk drives and personal computer parts.
By geography, shipments to seven of the top 10 export markets contracted last month, with Malaysia, Indonesia and the United States accounting for the largest declines. Exports to Hong Kong, the European Union, and South Korea rose.
Singapore’s economy is closely tied to trends in global trade — which has seen subdued expansion in recent years.
Last Friday (Oct 15), advance estimates for third-quarter gross domestic product showed Singapore’s economy contracted 4.1 per cent on a quarter-on-quarter seasonally adjusted annualised basis, its worst slump in four years.
Despite that, the Monetary Authority of Singapore (MAS) refrained from easing policy and chose to continue guiding the local currency on a zero appreciation stance, a move analysts said reflected the central bank’s wish to save its ammunition in case conditions worsen.
“At the end of the day, it is more a question of demand rather than if we can compete on the exchange rate, because it will always be cheaper elsewhere,” said CIMB Private Bank economist Song Seng Wun. “Singapore isn’t alone in reporting weak export data, if it’s any consolation.
‘‘The countries that have reported September numbers — Indonesia, South Korea, China — have shown different magnitudes of decline. This reflects a fragile underlying demand condition … For MAS to move before the next policy review in April, we would have to see the growth momentum slow down far more significantly from this point.”