Singapore's non-oil domestic exports fall

Workers at an electronics manufacturing company that makes printed circuit boards. Although exports for the important electronics sector rose 2.3 per cent last month, building on June's 7.6 per cent expansion, this was offset by a 2.1 per cent fall i
Workers at an electronics manufacturing company that makes printed circuit boards. Although exports for the important electronics sector rose 2.3 per cent last month, building on June's 7.6 per cent expansion, this was offset by a 2.1 per cent fall in non- electronic exports.ST FILE PHOTO

0.8% slide in July renews fears of further knocks from volatility in global economy

Singapore exports shrank last month, renewing fears that the trade-dependent economy will continue to be weakened by global headwinds such as slowing growth in China.

After rising 4.5 per cent in June, non-oil domestic exports (Nodx) slid 0.8 per cent in July from a year earlier - worse than consensus forecasts of flatlining growth.

Although exports for the important electronics sector rose 2.3 per cent last month, building on June's 7.6 per cent expansion, this was offset by a 2.1 per cent fall in non-electronic exports.

Electronic export growth was boosted mainly by PCs, which surged 74.3 per cent, and telecommunications equipment, which rocketed 86.6 per cent.

The contraction in non-electronic exports was led by exports of structures of ships and boats, which plummeted 98.3 per cent. Exports of printed matter sank 51.8 per cent and those of primary chemicals fell 22.1 per cent.

Nodx to all Singapore's top 10 markets except Hong Kong, South Korea and Thailand, declined .

The weak export data comes after some negative economic news. Last Tuesday, the Ministry of Trade and Industry narrowed Singapore's economic growth forecast for 2015 to 2 to 2.5 per cent from 2 to 4 per cent. Among the reasons it gave was that it expected growth in the United States to remain modest.

The weaker export numbers have cast doubt over third-quarter growth.

ANZ's chief economist for South Asia, Asean and Pacific, Mr Glenn Maguire, said given weak global demand, exports would remain at last year's levels even under an optimistic scenario. "There's an absence of a strong final force of demand, be it the Chinese industrial economy or US households. In that environment, exports are likely to remain weak."

Senior economist at DBS Irvin Seah expects exports to remain at the same level as last year. He said China's yuan devaluation would have a limited impact on exports, barring further devaluations.

This is because Singapore exports have not become significantly more expensive in China yet, as the Singdollar also depreciated against the US dollar last week.

Overall, it has appreciated against the Chinese yuan by only around 1 per cent.

It is uncertain whether the recovery in electronics exports will be sustained, said Mr Maguire.

To see any sustained recovery in electronic exports in the medium term, there would have to be an increase in global business investment.

This is because Singapore's electronics exports are slightly more sensitive to business demand than consumer demand, he noted. This is likely to increasingly be the case as the nation restructures away from producing consumer electronics towards high-end business electronics such as cloud-servers.

But business sentiment in developed markets has remained weak.

The fairly significant weakening of the Malaysian ringgit and more expensive input costs here would also hamper the competitiveness of electronic exports, he said.

A version of this article appeared in the print edition of The Straits Times on August 18, 2015, with the headline 'Singapore's non-oil domestic exports fall'. Print Edition | Subscribe