Weak global demand for electronics helped crimp exports here last month with only marginal gains racked up, and hints that worse is to come.
The main culprit was easy to identify in yesterday's numbers with electronic shipments contracting for the seventh straight month.
But the bigger picture takes in the threats of trade conflicts and China's slowing growth, which could hinder exports in the coming months.
Non-oil domestic exports (Nodx) fell short of market expectations with a subdued 1.1 per cent growth in June over the same month last year, well shy of the 15.5 per cent surge in May. A Bloomberg poll of economists had projected Nodx to increase by 7.8 per cent last month.
Non-electronic exports were the saving grace, growing 4.6 per cent year-on-year last month, but that was a sharp decline from May's blistering 26.2 per cent expansion. Food preparations, pharmaceuticals and petrochemicals contributed most.
Electronic Nodx continued to disappoint, declining by 7.9 per cent, similar to the 7.8 per cent decrease in May. The slump was led by integrated circuits, parts of PCs and consumer electronics.
DBS economist Irvin Seah said the strong overall export performance in recent months was driven largely by ad hoc items such as civil engineering equipment and the ever-volatile pharmaceutical sector, so sustaining that momentum was always in question.
Economists warned that the persistent decline of electronic exports shows no sign of letting up.
And given the high base effects in July and August, export growth in the sector is likely to remain lacklustre in the near term, noted OCBC economist Selena Ling.
Last year's stellar economic growth was mostly driven by electronics, but the pace was expected to slow this year as smartphone production cycles peaked.
Dr Tan Khay Boon, a senior lecturer at SIM Global Education, said: "The strong demand in electronics output is not sustainable, and efforts to diversify to non-electronics output have to continue to support export as an engine of growth."
Shipments to most of Singapore's top 10 markets declined last month, except for exports to the United States, Indonesia, Hong Kong and the European Union.
Market watchers were quick to note that exports to China declined for the second straight month.
Mr Jameel Ahmad, global head of currency strategy and market research at FXTM, said: "It is a little too early to tell but it is possible that trade war concerns might have weighed on demand from China."
Economists also warned of several risks ahead, particularly the impact of the US-China trade conflict on a small, open, trade-dependent economy like Singapore.
Ms Ling said Nodx momentum is likely to "decelerate further" into the third quarter, assuming further disruptions to regional supply chains if the US$200 billion (S$272 billion) of US tariffs on Chinese imports materialise in September.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye are sticking to their full-year gross domestic product (GDP) growth forecast of 3.5 per cent, but noted: "Recent property measures appear ill-timed and overly harsh."
Mr Seah expects the export slowdown to hit GDP growth for the third quarter. "Couple that with the effects of trade protectionism and tighter liquidity conditions, the economic outlook in the longer horizon is turning increasingly cloudy."