Full-year forecast for non-oil exports cut after Q1 setback

Non-oil domestic exports dropped by 6.4 per cent in the first quarter from the same period last year.
Non-oil domestic exports dropped by 6.4 per cent in the first quarter from the same period last year. PHOTO: ST FILE

The export sector had another poor quarter as headwinds in global trade continue to take their toll.

Non-oil domestic exports (Nodx) dropped by 6.4 per cent in the first quarter from the same period last year.

This follows the 1.1 per cent contraction in the final three months of 2018, Enterprise Singapore (ESG) said yesterday.

ESG has responded to the lacklustre numbers by cutting the full-year projected Nodx performance from between 0 and 2 per cent growth to between negative 2 and 0 per cent growth.

It noted that global economic and trade growth are both expected to slow further in 2019 after expansion in the last two years, but added that fundamentals in key sectors such as biomedical and general manufacturing should support exports this year.

Maybank Kim Eng economist Lee Ju Ye noted that the downward adjustment in projected Nodx may be a conservative one, given that shipments are already down by more than 7 per cent this year.

Considering that Nodx has been relatively negative in the first four months and is likely to stay that way in the second quarter, "quite a strong rebound in the second half is needed" to hit the expected range, noted Ms Lee.

Exports across Asean are mostly in decline as well, and hopes of a recovery in the second half are looking dim with the United States and China unlikely to reach a trade deal in the coming months.

 

Ms Lee also pointed to the risks stemming from moves by technology giants to suspend business with Chinese firm Huawei.

"Even if they find a resolution on tariffs, if they impose such controls on tech firms, I think the global demand for electronics will continue to stay weak," she said.

The electronic and non-electronic Nodx declined in the first quarter.

Domestic exports of electronic products dropped by 17.2 per cent, extending a 3.6 per cent decrease from the previous quarter, with disk media products, personal computers and integrated circuits contributing the most to the fall.

Exports of non-electronic products fell 2.6 per cent year on year after a 0.2 per cent dip in the previous three months.

The largest contributors to this were specialised machinery, petrochemicals and primary chemicals.

However, ESG has maintained its forecast for total trade at 0 per cent to 2 per cent growth for 2019.

Non-oil domestic exports to Singapore's top 10 markets fell in the first quarter except to the US and Thailand. Shipments to Japan, South Korea and Europe were particularly hard hit.

Oil domestic exports dropped by 6.5 per cent in the first quarter compared with a year ago, while oil re-exports contracted 70 per cent.

TRADE WAR RISKS

Even if they find a resolution on tariffs, if they impose such controls on tech firms, I think the global demand for electronics will continue to stay weak.

MS LEE JU YE, Maybank Kim Eng economist, on the moves by technology giants to suspend business with Chinese firm Huawei.

In a separate study also released yesterday, Ministry of Trade and Industry economists Adeline Yeo, Nicholas Chiang and Tek Yong Jian said Singapore's economic links with its key external markets have shifted significantly over the past decade.

Growth here is now more closely tied to final demand in China and the five Asean countries of Indonesia, Malaysia, Philippines, Thailand and Vietnam, instead of to the euro zone and the US.

"Consumption and investment cycles in Asia would now have a greater bearing on the domestic economy," they said.

A version of this article appeared in the print edition of The Straits Times on May 22, 2019, with the headline 'Full-year forecast for non-oil exports cut after Q1 setback'. Print Edition | Subscribe