Economists react to August export data: Numbers better but tough road ahead

A container ship docks at PSA's Tanjong Pagar terminal in Singapore on Sept 9, 2016.
A container ship docks at PSA's Tanjong Pagar terminal in Singapore on Sept 9, 2016. PHOTO: REUTERS

SINGAPORE - Singapore's non-oil domestic exports (NODX) posted no growth in August from a year earlier but this was better than analysts expected and a big improvement from the 10.6 per cent slide suffered in July.

Month on month though, shipments fell 1.9 per cent in August, after a similar contraction in July, official figures out on Friday (Sept 16) showed.

Six of Singapore's top 10 export markets saw growth in August, led by Taiwan, Hong Kong and the United States.

But sales fell most to the European Union, where they sank 31.5 per cent year-on-year. Shipments to China - Singapore's single biggest export market - declined 5.4 per cent year-on-year in August, much less than the 16.6 per cent tumble in July.

UOB economist Francis Tan: On track to recovery but no certainty of one

The trend of a better export picture in August compared to July was also exhibited in the recent export numbers released in China and Indonesia.

Zooming into Singapore's export data (since 2009), it appears that NODX is on track to a recovery.

That said, the data trend does not imply certainty that Singapore's trade numbers will get stronger. Should there be a large economic/financial shock, it may still change this improving path.

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 2.0 per cent, compared to the average 4.7 per cent year on year decline in the first 8 months of this year.

OCBC Bank head of treasury research & strategy Selena Ling: Choppy road ahead

NODX performance is likely to stabilise but remain choppy in the months ahead. The modest pick-up in US economy, mitigated by sluggish growth in the Eurozone and Japan, and continued deceleration in China, point to a greater reliance on regional trade momentum driven by domestic demand at this juncture.

We tip 2016 NODX growth to be -4 per cent year-on-year, with the year-to-date currently running at -4.1 per cent.

SIM Global Education senior lecturer Dr Tan Khay Boon: No meaningful recovery in near future

In the midst of a weak external environment, less negative news can be considered positive. The flat NODX growth year-on-year for August 2016 in contrast with a double-digit decline in July 2016 can be considered an improvement. However, sustainability is an issue as the month-on-month data is still declining.

With growth in China continuing to be moderate, US growth still uneven and the EU outlook remaining weak and doubtful partly due to Brexit, there is simply no positive stimulus that can bring about a meaningful recovery in the export performance of Singapore in the near future.

Low oil prices, possible higher interest rates and stronger protectionist views in the global economy are likely to be the three main negative factors to the growth of Singapore.