Non-oil exports fall 4.8%, outlook still gloomy

Exports declined less than expected last month but the outlook for Singapore's small, trade-dependent economy remains gloomy.
Exports declined less than expected last month but the outlook for Singapore's small, trade-dependent economy remains gloomy.PHOTO: ST FILE

Exports declined less than expected last month but the outlook for Singapore's small, trade-dependent economy remains gloomy.

Non-oil domestic exports (Nodx) fell 4.8 per cent in September compared with the same month a year earlier - a smaller contraction than economists' expectations of a 5.8 per cent slide. This came after zero year-on-year growth in August.

The numbers released yesterday by trade agency IE Singapore were the latest in a recent spate of depressing economic data, signalling that Singapore is likely in for a protracted slowdown.

Advance estimates released last week by the Ministry of Trade and Industry showed that the local economy grew just 0.6 per cent in the July to September quarter, the weakest rate of growth since 2009 in the wake of the global financial crisis.

Both electronic and non-electronic shipments weighed on Septem- ber's trade numbers, according to yesterday's data.

Electronic Nodx shrank 6.6 per cent over the same month last year, largely owing to declines in shipments of integrated circuits, disk drives and PC parts.

Non-electronic Nodx slid 4 per cent, driven by fewer exports of structures of ships and boats, civil engineering equipment parts and petrochemicals.

Shipments to Singapore's top 10 markets, except Hong Kong, the European Union and South Korea, contracted year on year in September.

The worst-hit markets were Malaysia, Indonesia and the United States. Exports to China - Singapore's largest trading partner - fell for the 15th straight month.

September's trade numbers were not as poor as expected and some exports - such as pharmaceuticals, electronics and petrochemicals - saw month-on-month growth, said Citi economist Kit Wei Zheng.

But there is "no reason to cheer as yet". He pointed to a statement from the Monetary Authority of Singapore last week which forecast that global trade will "grow more slowly than expected" going into next year.

This means trade-related sectors will continue to weigh on economic growth in the coming quarters.

Should the economy take a turn for the worse in the coming months, the central bank may act to nudge the Singdollar lower at its next policy meeting in April - or possibly even earlier, said Mr Kit.

Inflation, manufacturing and labour market statistics due out next week will offer a clearer idea of the economy's performance in this half of the year, he added.

SIM Global Education senior lecturer Tan Khay Boon said "the plight of weak exports" is unlikely to ease without a significant improvement in external demand.

"Instead of pinning hopes on a depreciation of the Singapore dollar - the effect of which is uncertain due to the high import content of manufacturing exports - other methods such as reducing industrial rents and providing subsidies to SMEs for them to lower costs and incorporate advanced technology can be given more consideration," he added.

A version of this article appeared in the print edition of The Straits Times on October 18, 2016, with the headline 'Non-oil exports fall 4.8%, outlook still gloomy'. Print Edition | Subscribe