Singapore has cut its forecasts for non-oil domestic exports (Nodx) and total merchandise trade for this year after weighing the likely impact of the coronavirus outbreak on its trading partners, and lower oil prices.
Nodx is now expected to be between minus 0.5 per cent and 1.5 per cent this year, trade agency Enterprise Singapore (ESG) said yesterday, a downgrade of its earlier projection of up to 2 per cent growth.
ESG also revised its forecast for total merchandise trade this year to the same new range as Nodx.
It noted that its earlier predictions for trade made last November had been "premised on a modest pickup in global growth, along with a recovery in the global electronics cycle in 2020".
Then came the coronavirus outbreak, with the epidemic spreading from China, Singapore's largest trading partner, to many countries.
"This may dampen the growth prospects of affected countries, if China's growth comes in lower than earlier expected, with a knock-on impact on regional economies, through lower import demand, as well as supply chain disruptions and weakened consumer and business sentiments," ESG said.
The trade agency also said lower oil prices are expected to weigh on Singapore's oil trade this year. The United States Energy Information Administration projected weakened global demand in the first quarter of this year, in part reflecting the effects of the outbreak, compared with its previous update.
Ahead of the virus outbreak fallout, Nodx saw a slower pace of decline of 5.7 per cent in the fourth quarter of last year, from a 9.6 per cent fall in the previous quarter on smaller drops in both electronics and non-electronics shipments.
Electronics exports fell by 20.4 per cent between last October and December, slightly less than the previous quarter's 25 per cent decline.
Nodx of non-electronics declined slightly by 0.3 per cent between October and December last year, easing from the 3.9 per cent decline in the previous quarter.
On a quarter-on-quarter seasonally adjusted basis, Nodx increased by 0.7 per cent between last October and December, following the 1.3 per cent growth in the previous quarter due to growth in both electronics and non-electronics Nodx.
ESG also announced that Nodx shrank by 9.2 per cent last year, unchanged from an advance estimate. This is the worst performance since 2009 and is sharply down from the 4.2 per cent growth in 2018.
Shipments of electronics slipped 22.5 per cent last year, following the 5.5 per cent drop in 2018.
Exports of non-electronics declined by 4.5 per cent last year after growing 8.2 per cent in 2018.
Exports to almost all of Singapore's top 10 markets were down last year, except for the US. The biggest contributors to the fall were Japan (minus 28.6 per cent), the European Union (minus 11.4 per cent) and Hong Kong (minus 16.6 per cent). Shipments to China - Singapore's single biggest export market - dipped 1 per cent last year.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said in a note that the decline in Nodx last month was partly due to fewer working days as the Chinese New Year fell in January this year.
"The Covid-19 impact is not reflected yet in the January numbers as the outbreak occurred towards the end of the month," they added.
"We expect a manufacturing and export recovery to materialise in the second half of the year, when the virus outbreak is contained and governments begin to unwind quarantine and border controls."
