Singapore's external trade data remained weak in the third quarter, with non-oil domestic exports (Nodx) contracting for a fourth consecutive quarter in the July to September period this year.
Amid the gloomy figures, Enterprise Singapore slashed its 2019 Nodx forecast to between minus 10 per cent and minus 9.5 per cent yesterday, a further cut from the lowered minus 9 per cent to minus 8 per cent range previously.
The agency expects Nodx to pick up next year, with growth in the range of zero to 2 per cent on the back of a gradual recovery in electronics, but economists noted that this seems to be a pessimistic outlook.
OCBC Bank's head of treasury research and strategy Selena Ling said the outlook does not suggest a recovery in shipments, given the low base of comparison this year from poor performance.
But she added that there remains room for better growth, with the possibility of Nodx coming in at 2 per cent to 4 per cent year on year "if there is no further escalation of US-China trade tensions in the form of fresh tariffs or tariff hikes".
Ms Emily Liew, director of planning, research and statistics at Enterprise Singapore, said at a press conference that while Singapore is still feeling the effects of the trade war, the hope is for exports to improve with a gradual pickup in electronics.
Electronics Nodx formed over 40 per cent of the overall decline in each quarter this year.
CIMB private banking economist Song Seng Wun said he is hopeful the data in the next two months will be better given the low base of comparison last year as well. He added that there are signs of stability in demand, especially on the technology front, with an uptick in chip equipment sales in the United States.
While the International Monetary Fund expects global growth to pick up modestly to 3.4 per cent next year, risks such as trade tensions, a no-deal Brexit withdrawal and deterioration in financial market sentiments could hit economic growth.
"Lower oil prices amid weak global demand is also expected to further weigh on our oil trade in nominal terms and, in turn, total trade in 2019 and 2020," said Enterprise Singapore.
While the growth outlook ahead remains clouded, the fall in Nodx eased in the third quarter from a previous double-digit drop.
Nodx fell 9.6 per cent from a year ago, up from a revised 14.7 per cent drop in the quarter before. It was dragged down by a 25 per cent contraction in electronics shipments, after a 27 per cent fall in the second quarter. Integrated circuits, personal computers and disk media products contributed the most to the drop.
Shipments of non-electronics products fell 3.9 per cent over the year, after a 10.6 per cent decrease in the second quarter. The largest contributors were pharmaceuticals, petrochemicals and primary chemicals.
Nodx to all top markets except China declined in the third quarter, with the biggest contributors being Japan, Hong Kong and Malaysia.
Permanent Secretary for Trade and Industry Gabriel Lim said yesterday that the manufacturing sector is expected to return to positive growth next year, led by the electronics and precision engineering clusters. This will support growth in related sectors like wholesale trade.
Mr Kelvin Wong, assistant managing director of planning at the Economic Development Board, added that electronics is likely to see a gradual pickup with normalisation of inventory and boost from 5G technology such as telecommunications equipment and smartphones.
Nodx grew 3 per cent quarter on quarter, after a 5.1 per cent drop.
Total merchandise trade fell 6.7 per cent in the third quarter, with its 2019 forecast adjusted down to minus 4.5 per cent to minus 4 per cent. The 2020 projection is zero to 2 per cent.
The Trade and Industry Ministry revised its full-year growth forecast yesterday to 0.5 per cent to 1 per cent, from zero to 1 per cent.
