Singapore exports endured their biggest fall in more than six years amid the worsening global trade climate - and analysts say a recovery in the second half of the year is now looking less likely.
Non-oil domestic exports (Nodx) fell by double-digits for the fourth straight month in June, with shipments in the key electronics sector sinking by around a third.
The broad-based slide comes shortly after economists trimmed their full-year growth forecasts for the Republic, with flash figures for second-quarter growth last week coming in at just 0.1 per cent.
DBS senior economist Irvin Seah said: "Now is the time for both monetary and fiscal policy to turn accommodative."
Monetary policy can provide a cushion for the medium term, while fiscal policy has to be ready if drastic counter-cyclical measures are needed, he added.
"The recent set of bad data has dashed any hope of a recovery in the second half. Typically, by the middle of the year, we should see numbers stabilising. But instead, we see further decline. The pace of decline has also accelerated."
The Nodx figures follow a "long string of awful data", Mr Seah added, with no respite in sight.
Nodx slumped 17.3 per cent compared with a year ago, down from a revised 16.3 per cent fall in May, Enterprise Singapore said yesterday. It was the biggest year-on-year drop since February 2013 and sharply below analysts' expectations of a 9.6 per cent fall in a Bloomberg poll.
UOB economist Barnabas Gan said Nodx for the first half of the year has seen its worst performance since the first six months of 2009, during the global financial crisis.
But Mr Seah said that while he expects the economic slowdown this time to be more severe than in the period from 2013 to 2015, it is not yet as bad as what was seen in the global financial crisis.
He foresees a challenging outlook ahead, with retrenchments likely to rise and job vacancies to decline.
Electronic Nodx declined by 31.9 per cent last month, extending its 31.6 per cent drop in May. This was dragged down by shipments of integrated circuits, personal computers and disk media products.
For non-electronic products, Nodx dropped 12.4 per cent, down from an 11.1 per cent fall, mainly due to declining shipments of nonmonetary gold, petrochemicals and pharmaceuticals.
Citi economists Kit Wei Zheng and Ang Kai Wei said Singapore's technology Nodx momentum "significantly underperformed" its regional peers, suggesting developments in regional supply chains may have hit tech-exporting multinationals in Singapore harder.
"If so, the fluidity of supply chain-related developments could be a source of volatility for exports in the coming months," they said.
Weighing on the overall outlook are ongoing trade tensions between the United States and China, a slowdown in the global electronic cycle and China's slowing growth.
Mr Gan said: "While headwinds against exports are not isolated to Singapore alone, further contraction in Nodx is likely to be on the cards, given the ongoing trade slowdown seen across Asia."
He added that trade figures from South Korea, Indonesia and China have been lacklustre, and semiconductor sales in the Asia-Pacific are at their weakest since August 2009.
Exports to most of Singapore's top 10 markets fell last month, with shipments to Hong Kong, China and Europe leading the decline.
The US was an exception, and ING economist Prakash Sakpal noted it is likely due to the underlying strength of the US economy.
The dismal numbers raise the prospect of a monetary policy easing later this year, said analysts.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said that given the current recession risk and softer core inflation, they expect the Monetary Authority of Singapore to ease the appreciation slope of the Singdollar in October.
But they added in a report: "We may see a weak export recovery in November or December on lower base effects and if the US and China can reach a trade deal by then."
