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MACRO VIEW

The puzzle of Singapore's weak exports

Published on Apr 21, 2014 11:51 AM
 

Singapore's exports have presented a puzzle of sorts to economists in the past couple of years.

Non-oil domestic exports (Nodx) to other countries have been persistently tepid despite a pick-up in the global economy, including in Singapore's major markets - Europe and the United States. Compounding the mystery is the fact that local factories have stayed busy, with manufacturing output on the rise even as exports are falling.

Data from trade agency IE Singapore last Thursday showed that Nodx tumbled an unexpectedly sharp 6.6 per cent in March over a year ago.

This was much worse than economists' forecasts of a mere 0.8 per cent dip and reflected lower demand from a worrying eight of Singapore's top 10 markets.

 
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Background story

ONE EXPLANATION

Some components are made in Singapore but are shipped back to Thailand for final assembly and testing and, as a result, may not meet the required level of Singapore content to be classified as Nodx. This would also explain the increasing divergence between electronics output and Nodx that started last year.

- Barclays economist Leong Wai Ho, on how the political turmoil in Thailand could have caused some manufacturers to divert part of their production to Singapore 

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