Here's what economists are saying about Singapore's disappointing export figures


All things considered however, the latest data from trade agency International Enterprise Singapore has not alarmed economists.
All things considered however, the latest data from trade agency International Enterprise Singapore has not alarmed economists.PHOTO: ST FILE

SINGAPORE - Exports in September stumbled after four months of growth as the electronics boom finally lost momentum.

Non-oil domestic exports (Nodx) fell 1.1 per cent last month over September last year, far below the 12.7 per cent increase economists had predicted.

This was the worst performance since December 2016, and a sharp reversal from the revised 16.7 per cent growth in August.

Although Nodx to seven of Singapore's top 10 markets rose in September, a fall in shipments to Europe, Hong Kong and Thailand led the overall decline.

Nodx to China, the largest market for Singapore's exports, remained in growth mode, but that engine is slowing. Shipments to the mainland inched up just 9.6 per cent in September from a year earlier, way below the double-digit growth figures recorded in prior months. In August, Nodx to China had surged 43.2 per cent.

OCBC economist Selena Ling said:"There seems to be a more consistent decline in electronics Nodx to seven of our top 10 markets including China, South Korea and Hong Kong. Note that although we expected China's second-half GDP growth to slow due to financial deleveraging and environmental policy efforts, PBOC governor Zhou Xiaochuan still sounded very upbeat and tipped growth to be seven per cent in the second half."

All things considered, the latest data from trade agency International Enterprise Singapore has not alarmed economists.

While electronics exports have underwhelmed, posting a 7.9 per cent last month after a stellar 20.8 per cent expansion in August, shipments of non-electronics exports continued to grow.

Non-electronics exports rose by 1.9 per cent last month, versus growth of 15 per cent in August. But that was largely weighed down by a 36 per cent plunge in pharmaceuticals sales. Drug production is a notoriously volatile business.

Nomura economists Euben Paracuelles and Brian Tan said: "Growth remains uneven, in our view. A further decline in external demand of electronics from September would be a significant drag on headline GDP growth, with the rest of the economy still weak."

Even so, "the Government's advance estimates appear to assume a slowdown in September industrial production growth - the Nodx data would appear to be in line with this", they said.

Nomura still expects full-year 2017 GDP growth to come in at the higher end of Singapore's official forecast range of 2 per cent to 3 per cent. This would imply fourth quarter GDP growth slowing to 1.3 per cent from a year ago. The economy expanded 4.6 per cent in the third quarter from a year earlier.

 

Ms Ling added: "So far, other regional manufacturing PMIs (Purchasing Managers Indices) and China's September trade data (including electronics imports) remained resilient. Which poses the question if the September Nodx data is a bit of a blip?"

She noted that Nodx growth has averaged 8.3 per cent a month so far this year, which is above the IE Singapore's 5 per cent to 6 per cent full-year 2017 Nodx growth forecast.

She's not worrying too much about October's Nodx figures either, given the low base set in October 2016. Last October, Nodx fell 12 per cent from a year ago, versus a fall of 5 per cent in September 2016.