Exports flat last month after slump

Economists say low oil prices, possibly higher interest rates and rising protectionist sentiments in markets like the US are likely to weigh on local export growth.
Economists say low oil prices, possibly higher interest rates and rising protectionist sentiments in markets like the US are likely to weigh on local export growth.ST PHOTO: JAMIE KOH

Nodx largely unchanged at $12.5b from a year ago, but experts warn of weak growth ahead

Singapore's non-oil domestic exports (Nodx) last month trumped bearish forecasts and were largely unchanged at $12.5 billion from a year earlier, after a sharp 10.6 per cent slide in July.

Total trade rose 0.6 per cent to $71.5 billion last month, in contrast to the 11.4 per cent slide in July.

A 2.7 per cent rise in non-electronic exports last month outweighed a 6 per cent dip in electronic exports, said trade agency International Enterprise (IE) Singapore.

But economists warned of weak growth ahead despite a pickup in sales last month to the United States, and Singapore performing better than a forecast 4.1 per cent drop in August shipments.

With China's growth continuing to moderate, US growth still uneven and the European Union's outlook remaining weak due to Brexit, there appears to be little stimulus to rev up Singapore's exports any time soon.

Low oil prices, possibly higher interest rates and rising protectionist sentiments in markets like the US are likely to weigh on local export growth, economists say.

  • $71.5b

    Total trade in August, a rise of 0.6 per cent.

    -6%

    Percentage fall in electronic exports last month, on a year-on-year basis.

    2.7%

    Percentage rise in non-electronic shipments last month.

"Overall, we continue to see the growth outlook as weak and forecast gross domestic product growth of 1.4 per cent for this year, slowing from 2 per cent last year," said Nomura Global Markets Research. "We continue to expect tepid global growth, especially given signs of faltering growth momentum in the US."

Sales to most of Singapore's top 10 markets rose last month, except for the EU, China, Japan and Indonesia.

Shipments to China - Singapore's biggest export market - fell 5.4 per cent year on year in August, compared with a 16.6 per cent tumble in July. The largest contributors to the increase in Nodx were Taiwan, Hong Kong and the US.

The August data can be considered an improvement, but sustainability is an issue as the month-on- month data is still declining, said Dr Tan Khay Boon, senior lecturer at SIM Global Education.

Month-on-month, seasonally adjusted August Nodx slid 1.9 per cent. Year on year, electronic exports fell by 6 per cent last month, following a 12.9 per cent dive in July. The decrease was largely due to personal computers (-21.6 per cent), disk drives (-31.2 per cent) and integrated circuits (-1.9 per cent).

Non-electronic shipments rose by 2.7 per cent, compared with a 9.5 per cent contraction in the previous month. The rise was led by non-electric engines and motors (+80.7 per cent), specialised machinery (+23 per cent) and structural parts made of iron, steel and aluminium (+809.6 per cent).

UOB economist Francis Tan noted that Nodx appeared to be recovering, as "the trough of the current period of weakness was from October 2015 to January this year, and it had been improving since".

That said, the latest numbers do not imply that Singapore's trade numbers will definitely get stronger. Should there be a large economic or financial shock, it may still skew the recovery, he said.

"We maintain our full-year Nodx growth forecast of a contraction of 2.5 per cent. This implies that Nodx over the next four months should average a growth of 2 per cent, compared with the average 4.7 per cent year-on-year decline in the first eight months of this year," he said.

A version of this article appeared in the print edition of The Straits Times on September 17, 2016, with the headline 'Exports flat last month after slump'. Print Edition | Subscribe