Singapore GDP figures could be revised downwards: Analysts on latest exports data

Traffic flows in front of the skyline in Singapore.
Traffic flows in front of the skyline in Singapore. PHOTO: BLOOMBERG

SINGAPORE - Singapore's non-oil domestic exports (NODX) shrank by a worse-than-expected 7.2 per cent in December from a year ago, the second straight month of contraction, after shipments to China fell more sharply.

Economists polled by Reuters were expecting December NODX to fall 5.1 per cent from a year earlier.

Shipments to all of Singapore's top 10 NODX markets, except the US, Japan and Hong Kong, contracted in December, International Enterprise Singapore announced in a report on Monday (Jan 18).

NODX to China tumbled by 18.7 per cent in December, following the previous month's decrease of 9.1 per cent

On a month-on-month seasonally adjusted (SA) basis, NODX declined by 3.1 per cent last month, after November's 3.8 per cent decrease, due to the contraction in non-electronic exports which outweighed the flat growth in electronic shipments.

Here are some analysts' reactions to the latest trade figures:

ANZ economist Weiwen Ng:

When the advance GDP print was released for Q4, our base case was that that number would be subject to significant downard revision, because it's premised on October and November data. Of course it was also predicated on the strength of the retail sector, but retail sales ex-automotives hasn't picked up post the SG50 celebrations in August. In fact, it has remained rather flat. It's hard to envisage any growth drivers.

DBS economist Irvin Seah:

This is a broad-based decline with both electronics (-0.3 per cent year-on-year) and non-electronics exports (-10.3% YoY) on the decline.

That said, non-electronics exports are the main reason for the poor showing, led by petrochemicals (-17.5 per cent), primary chemicals (-41.8 per cent) and civil engineering equipment parts (-43.5 per cent). While one can easily blame the plunge in oil prices for that, weakness in global demand is the main story behind the numbers.

Exporters are indeed undergoing challenging times. Beyond the medium term structural decline, deceleration in China and an uneven recovery in the US are still weighing down on export performance. Moreover, a resilient Singapore dollar is another concern. Although the Singdollar has depreciated against the US dollar, it has been fair resilient against currencies of its key Asian export markets such as the ringgit and the yuan.

Plainly, today's set of numbers is another reminder about the harsh environment out there. The implications are that the GDP figures for 4Q15 could be revised downwards and that the exchange rate policy is still on an easing bias. More importantly, such dire economic conditions will likely persist for the coming months judging from the outlook of the global economy. Brace yourself for a very cold winter.

Citi economist Kit Wei Zheng:

While monthly NODX data should be interpreted with caution, we nonetheless see rising odds of downward revision in Q4 GDP, though we will get greater clarity with the December industrial production data.

Should a downward revision in 4Q GDP (which seems likely) and 1Q16 GDP weakness bring average growth in these two quarters to less than 0.5 per cent quarter on quarter SAAR (seasonally adjusted, annual rate), we think odds of an April (monetary) easing would rise, despite the high hurdle placed by MAS (Monetary Authority of Singapore) for such a move.