A 'wake-up call': Economists on July's dismal export figures

An aerial view of PSA International and its containers at Tanjong Pagar Terminal in August 2015.
An aerial view of PSA International and its containers at Tanjong Pagar Terminal in August 2015.PHOTO: ST FILE

SINGAPORE - Non-oil domestic exports (NODX) plunged 10.6 per cent in July from a year earlier. much worse than market expectations of a 2.5 per cent decline and down from an already poor showing of a 2.4 per cent contraction in June.

Electronics shipments dived by 12.9 per cent year on year while exports of non-electronics products pulled back by 9.5 per cent after robust expansion in previous months. Sales to all of Singapore's top markets, except the EU, were affected. Here's what some economists' said of the July export report:

DBS senior economist Irvin Seah: "A wake-up call"

"This is a broad-based decline and once again it reflects the downside risk to the growth outlook amid a challenging external environment. It adds to the long list of poor data pointing to the risk of an economic contraction ahead. Second quarter GDP figures have been revised down. The official full year GDP growth forecast has been lowered. Economic numbers across the region are mostly heading down rather than up. The writing is on the wall. For those maintaining a sanguine view on the near term outlook on the economy, this should be a wake-up call.

Slowdown in China is the main concern but sluggish growth in the US and uncertainties surrounding the Eurozone are not helping. In addition, commodity and energy prices have not recovered. These confluence of factors are essentially pointing in the same direction on growth outlook. And it's down, not up."

UOB economist Francis Tan: Dismal data but second-half pick-up still possible

"Although today's July NODX data was dismal, it does not change our outlook of the potential pick-up in global trading activities in the months ahead. We agree that it will be difficult to project accurately the eventual timing of the positive spillovers for Singapore's exports as it will entail even more variables (such as domestic cost competitiveness), and not just stronger global trading flows. That said, we maintain our full year NODX growth forecast of a contraction of 2.5 per cent. This implies that second half performance would be better than the first half (-0.6 per cent year on year in H2 versus -4.5 per cent yoy in H1)."

ANZ economist Ng Weiwen: Region looking at trade recession

"This is not peculiar to Singapre - the region as a whole seems to be looking at a rather protracted trade recession lasting longer than the Asian Financial Crisis in 1997, dotcom crisis in 2000 and Global Financial Crisis in 2008.

"Cyclical improvements led by demand for tech products or firmer growth in the United States, for example, does not detract from broader structural issues, such as in-sourcing in China and in the US. This leads to less reliance on the region for imports. The reverberations are felt across the valuechain."