Analysts' take: Singapore non-oil domestic exports shrink in October

SINGAPORE - Singapore's non-oil domestic exports (NODX) dropped 0.5 per cent year-on-year in October due to a contraction in electronic exports, reversing a brief 0.3 per cent growth in September.

According to IE Singapore, electronic shipments slipped by 3.2 per cent in October, a steep drop when compared to the 5.7 per cent increase in September.

Meanwhile, non-electronic NODX grew by 0.7 per cent in October, after a 1.9 per cent decline in September. On a year-on-year basis, NODX to all of Singapore's top 10 markets - except for Japan, the European Union and Hong Kong - contracted in October, with blame largely falling on China, Taiwan and South Korea.

Here's what three analysts have to say:

1. UOB economist Ho Woei Chen: Technical recession fears revisited

The contraction in October NODX, though less than market's forecast, has continued to portray a negative outlook for global trade. Exports from key Asian exporters including China (-6.9 per cent year-on-year), South Korea (-15.8 per cent year-on-year) and Taiwan (-11.0 per cent year-on-year) have remained in contraction in the month of October. This suggests that growth will likely remain lackluster in the fourth quarter. We remain cautious about the Singapore export outlook and therefore maintain our 2015 NODX forecast of a 1 per cent contraction.

Based on September industrial output, we see some downside risk to the 3Q15 growth rate and we could also see fears of "technical recession" being re-visited.

2. Bank of America Merrill Lynch Asean economist Chua Hak Bin: Electronics exports weakness seen persisting in 2016

We think Singapore's electronic exports will likely stay weak for the rest of 2015, with the weakness persisting in early 2016. Globally, the PC industry remains in the doldrums, with subdued demand and worldwide PC shipments down 9.5 per cent and 7.7 per cent in the second and third quarter of 2015 respectively.

We expect Singapore's GDP growth to stay weak, given weak global trade volumes and strict foreign labour policies. With weaker than expected Sep IP (-4.8 per cent), Singapore may have slipped into a shallow technical recession in the third quarter.

We expect the MTI to downgrade its current 2015 GDP growth of 2 per cent to 2.5 per cent, and forecast a less ambitious 1 per cent-3 per cent GDP growth for 2016 (versus 2 per cent-4 per cent at start of 2015). We are forecasting GDP growth of 1.6 per cent in 2015 and 2 per cent in 2016.

3. Citi economist Kit Wei Zheng: NODX rises sequentially in October on weaker SGD and pharma

The rise in Oct NODX was largely due to lumpy pharma and possibly translation effects from a weak SGD, with the sequential fall in real terms and "core" suggesting that fundamental demand remains soft. Lackluster exports to US and China reaffirm Oct MPS' view of limited lift from G3 growth and drag from China's slowdown.